Morgan Stanley boosts Axon Enterprise stock forecast amid AI potential
- Meta Marshall upgraded Axon Enterprise to overweight with a price target of $700.
- The company has demonstrated substantial revenue growth of over 30% in the first three quarters of this year.
- Analysts remain largely bullish, with 14 out of 16 giving it strong buy ratings, suggesting confidence in the firm's continued success.
On December 3, 2024, Morgan Stanley analyst Meta Marshall provided a positive outlook on Axon Enterprise, a company known for its law enforcement tools such as Tasers and body cameras. Marshall upgraded the stock to overweight, indicating confidence in the company's growth trajectory. She set a price target of $700, suggesting approximately a 10% upside from the stock's closing price the previous day. This optimistic assessment comes as Axon has reported impressive performance metrics, including over 30% annual revenue growth in each of the first three quarters of the year, marking a strong continuation of its growth streak for 11 successive quarters. Marshall highlighted the enduring nature of Axon's growth, attributing it to an increase in software revenue, which is becoming a significant aspect of the company's business model. The firm has a forward price-to-earnings ratio of 124.5, indicating a potentially high valuation. However, Marshall asserts that Axon's free cash flow margins and operating profile are increasingly attractive compared to its high-growth counterparts. As a result, this strong financial foundation supports the company’s continued expansion in the market. Artificial intelligence is also seen as a major growth driver for Axon. Marshall points out the opportunity for the company to enhance its product offerings through AI, which could enable them to upsell premium bundles to users. This move could contribute positively to the total addressable market and lead to further growth. The analyst remains aware of the challenges posed by the stock's current valuation but believes in the long-term potential of the stock, encouraging investors to consider it a core holding despite the high price-to-earnings ratio. Marshall's optimistic report aligns with a broader bullish sentiment on Wall Street, where 14 out of 16 analysts covering Axon gave it a strong buy or buy rating. Following this upgrade, shares of Axon saw a positive response in the market, rising about 2% and reaching an all-time high. Such actions and assessments from both the analyst and the market reflect a growing confidence in Axon's future performance, especially as they expand their offerings and capitalize on new technologies like AI.