Axon Stock Declines Amid Broader SaaS Sell-Off
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Source: NASDAQ.COM
- Significant Stock Drop: Axon's shares fell 19.1% this week, despite the absence of company-specific negative news, reflecting a broader sell-off trend in high-priced SaaS stocks that may impact investor confidence.
- Market Sentiment Shift: This week, industry giants like Microsoft, ServiceNow, and SAP experienced double-digit declines, even though their earnings reports were largely in line with expectations, indicating a notable shift in market sentiment towards the software sector, affecting Axon as well.
- Valuation Context: With a current price-to-sales ratio of 16, Axon is still considered expensive, but this represents a significantly more attractive price compared to its trading levels over the past year and a half, potentially offering a buying opportunity for investors.
- Future Earnings Expectations: Axon is set to report its fourth-quarter earnings on February 24, with analysts forecasting a 31.3% revenue growth to $755.3 million, but a drop in adjusted earnings per share from $2.08 to $1.60 due to increased spending on new technologies and acquisitions, making this a crucial moment to assess its market position.
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Analyst Views on AXON
Wall Street analysts forecast AXON stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for AXON is 800.38 USD with a low forecast of 610.00 USD and a high forecast of 925.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
15 Analyst Rating
14 Buy
1 Hold
0 Sell
Strong Buy
Current: 509.580
Low
610.00
Averages
800.38
High
925.00
Current: 509.580
Low
610.00
Averages
800.38
High
925.00
About AXON
Axon Enterprise, Inc. is a technology company in global public safety. It is building the public safety operating system by integrating a suite of hardware devices and cloud software solutions that lead modern policing. Its segments include Connected Devices and Software & Services. Connected Devices segment includes the development, manufacture and sale of fully integrated hardware solutions such as conducted energy devices (CEDs), body cameras, drones, accessories, extended warranties and other hardware products. Software & Services segment includes the development and sale of fully integrated cloud-based software solutions such as Axon Evidence, Records Management System, Draft One and other software and services that enable law enforcement to securely store, manage, share and analyze video and manage operations. Its global customer base includes first responders across international, federal, state and local law enforcement, fire, corrections and emergency medical services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Axon Stock Declines Amid Broader SaaS Sell-Off
- Significant Stock Drop: Axon's shares fell 19.1% this week, despite the absence of company-specific negative news, reflecting a broader sell-off trend in high-priced SaaS stocks that may impact investor confidence.
- Market Sentiment Shift: This week, industry giants like Microsoft, ServiceNow, and SAP experienced double-digit declines, even though their earnings reports were largely in line with expectations, indicating a notable shift in market sentiment towards the software sector, affecting Axon as well.
- Valuation Context: With a current price-to-sales ratio of 16, Axon is still considered expensive, but this represents a significantly more attractive price compared to its trading levels over the past year and a half, potentially offering a buying opportunity for investors.
- Future Earnings Expectations: Axon is set to report its fourth-quarter earnings on February 24, with analysts forecasting a 31.3% revenue growth to $755.3 million, but a drop in adjusted earnings per share from $2.08 to $1.60 due to increased spending on new technologies and acquisitions, making this a crucial moment to assess its market position.
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Axon Shares Plunge 19.1% Amid Broader SaaS Sell-Off
- Stock Price Decline: Axon Enterprise's shares fell 19.1% this week without any specific negative news, indicating a broader sell-off in the software-as-a-service (SaaS) sector due to concerns over AI disruption and high valuations, reflecting a significant shift in market sentiment.
- Market Performance Analysis: As of Friday noon, Axon's stock primarily dropped on Wednesday and Thursday, despite earnings results from industry giants like Microsoft, ServiceNow, and SAP being in line with estimates, their stocks still saw double-digit declines, exacerbating market unease.
- Strong Competitive Advantages: Despite the competitive threat from AI, Axon has established a robust competitive edge with its TASERs and body cameras, along with software that manages evidence and records, making it a clear leader in law enforcement technology that is unlikely to be unseated in the short term.
- Future Outlook: Axon currently trades at a price-to-sales ratio of 16, which, while not cheap, is an improvement compared to its trading levels over the past year and a half; the company is expected to report fourth-quarter earnings on February 24, with revenue projected to grow 31.3% to $755.3 million, although adjusted earnings per share are anticipated to decline, reflecting increased spending on new technology investments.
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