Software Stocks Rebound, Axon Enterprise a Buy
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1d ago
0mins
Should l Buy AXON?
Source: Fool
- Axon Overview: Axon Enterprise (AXON) focuses on hardware and software products for law enforcement, having performed well over the past decade; however, its stock has dropped about 50% from six months ago, reflecting market volatility's impact.
- Revenue Growth Forecast: Axon's revenue is expected to grow 31% to $2.74 billion in 2025, and despite a current price-to-sales ratio of 14, it is viewed as a solid investment due to its strong competitive advantages and long-term growth potential.
- Stable Customer Base: Axon's clientele primarily consists of state and local law enforcement agencies, which are less inclined to pursue custom AI software, providing resilience during market fluctuations and ensuring continued use of its software suite.
- Atlassian's Challenges: In contrast to Axon, Atlassian (TEAM) achieved a 23% revenue growth in the latest quarter but has seen its stock plummet 72% over the past year due to competitive pressures from AI tools, and it has struggled to achieve GAAP profitability for a decade, warranting caution from investors.
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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: 446.970
Low
610.00
Averages
800.38
High
925.00
Current: 446.970
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.
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- Merger Prospects: The potential merger between SpaceX and xAI has garnered market attention, particularly with SpaceX's anticipated IPO in 2026, as this merger could attract investor interest and enhance the IPO's appeal.
- Capital Market Competition: Currently, companies like OpenAI and Anthropic are also vying for entry into the capital markets, highlighting the fierce competition among large capital-intensive firms for IPOs, and the merger of SpaceX and xAI could enhance their market attractiveness in this context.
- Investor Confidence: Although the market remains cautious about mergers involving Elon Musk's companies, analysts believe that such a merger could provide these firms with greater resource and capital liquidity, helping them achieve better valuations ahead of their IPOs.
- Technological Integration Potential: If SpaceX and xAI successfully merge, it could create a powerful technological ecosystem that leverages AI to enhance innovation in aerospace and transportation, thereby gaining a competitive edge in future market dynamics.
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Software Stocks Rebound, Axon Enterprise a Buy
- Axon Overview: Axon Enterprise (AXON) focuses on hardware and software products for law enforcement, having performed well over the past decade; however, its stock has dropped about 50% from six months ago, reflecting market volatility's impact.
- Revenue Growth Forecast: Axon's revenue is expected to grow 31% to $2.74 billion in 2025, and despite a current price-to-sales ratio of 14, it is viewed as a solid investment due to its strong competitive advantages and long-term growth potential.
- Stable Customer Base: Axon's clientele primarily consists of state and local law enforcement agencies, which are less inclined to pursue custom AI software, providing resilience during market fluctuations and ensuring continued use of its software suite.
- Atlassian's Challenges: In contrast to Axon, Atlassian (TEAM) achieved a 23% revenue growth in the latest quarter but has seen its stock plummet 72% over the past year due to competitive pressures from AI tools, and it has struggled to achieve GAAP profitability for a decade, warranting caution from investors.
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- Merger Prospects: The potential merger between SpaceX and xAI has garnered market attention, particularly with SpaceX's anticipated IPO in 2026, as this merger could attract investor interest and enhance the IPO's appeal.
- Capital Market Competition: Currently, companies like OpenAI and Anthropic are also vying for entry into the capital markets, highlighting the fierce competition among large capital-intensive firms for IPOs, and the merger of SpaceX and xAI could enhance their market attractiveness in this context.
- Investor Confidence: Although the market remains cautious about mergers involving Elon Musk's companies, analysts believe that such a merger could provide these firms with greater resource and capital liquidity, helping them achieve better valuations ahead of their IPOs.
- Technological Integration Potential: If SpaceX and xAI successfully merge, it could create a powerful technological ecosystem that leverages AI to enhance innovation in aerospace and transportation, thereby gaining a competitive edge in future market dynamics.
See More
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- Axon Overview: Axon Enterprise (AXON) focuses on hardware and software products for law enforcement, having performed well over the past decade; however, its stock has dropped about 50% from six months ago, reflecting market volatility's impact.
- Revenue Growth Forecast: Axon's revenue is expected to grow 31% to $2.74 billion in 2025, and despite a current price-to-sales ratio of 14, it is viewed as a solid investment due to its strong competitive advantages and long-term growth potential.
- Stable Customer Base: Axon's clientele primarily consists of state and local law enforcement agencies, which are less inclined to pursue custom AI software, providing resilience during market fluctuations and ensuring continued use of its software suite.
- Atlassian's Challenges: In contrast to Axon, Atlassian (TEAM) achieved a 23% revenue growth in the latest quarter but has seen its stock plummet 72% over the past year due to competitive pressures from AI tools, and it has struggled to achieve GAAP profitability for a decade, warranting caution from investors.
See More
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- Lowest Momentum Rating: Axon Enterprise (AXON) tops the list with an F momentum grade and D- valuation grade, indicating weak price performance that may lead to declining investor confidence and affect future capital inflows.
- High Valuation Concerns: Enovix (ENVX) and Paycom Software (PAYC) also received F momentum grades and C valuation grades, suggesting that these companies may be overpriced in the market, prompting investors to carefully assess their investment value.
- Wide Industry Distribution: The list spans various sub-sectors, including Aerospace and Defense, Electrical Components and Equipment, and Human Resource & Employment Services, highlighting the widespread challenges facing the industrial sector that could impact overall market performance.
- Market Environment Impact: As geopolitical tensions and economic uncertainties rise, the weakening momentum and high valuations of industrial stocks may lead investors to reassess risks, subsequently affecting overall market liquidity and investment strategies.
See More
Axon Stock Rebounds as Government Deploys Body Cameras
- Stock Rebound: Axon shares rose over 4% in pre-market trading on Tuesday, and if this gain holds during regular trading hours, it will end a four-day losing streak and recover some of its year-to-date losses, indicating a resurgence of market confidence in the company.
- Government Deployment Plan: U.S. Secretary of Homeland Security Kristi Noem announced that every officer in Minneapolis will be equipped with body cameras, and as funding becomes available, this program will expand nationwide, likely increasing demand for Axon's products in the public safety sector.
- Surge in Market Sentiment: Retail message volume on Stocktwits surged by 1,275% in the last 24 hours, reflecting a shift in investor sentiment towards Axon from 'bearish' to 'extremely bullish', which could further drive the stock price upward.
- Market Share Advantage: Axon holds approximately 85% of the body camera contract market share among major U.S. cities and public safety buyers, and despite a 31% decline in stock price over the past year, its market leadership provides a strong foundation for future growth.
See More
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- Unity Software Plunge: Unity Software Inc. saw a 31.63% drop this week, primarily due to CEO Matthew Bromberg's social media post about the company and 'world models', raising concerns about its future and potentially undermining investor confidence.
- Hecla Mining Decline: Hecla Mining Company experienced a 33.33% decrease this week, as President Trump's nomination of Kevin Warsh for Fed Chair strengthened the dollar, reducing demand for safe-haven assets and negatively impacting precious metal stocks.
- UnitedHealth Target Cuts: UnitedHealth Group Incorporated fell 17.87% this week after multiple analyst firms lowered their price targets, reflecting market concerns over its future profitability and prompting investors to reassess their holdings.
- First Majestic Silver Drop: First Majestic Silver Corp. decreased by 22.86% this week amid a broader weakness in the precious metals market, leading to investor unease regarding the company's outlook and potentially affecting its financing and expansion plans.
See More
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.
See More
