Axon Enterprise stock rating reiterated at Buy by TD Cowen, AI growth cited

Investing.com - TD Cowen has reiterated its Buy rating and $925.00 price target on Axon Enterprise (NASDAQ:AXON), currently trading at $647.13 with a market capitalization of $51.2 billion, citing expectations for strong quarterly results and an accelerating AI product cycle. According to InvestingPro data, analyst consensus remains strongly bullish with price targets ranging from $800 to $1,000.

The firm expects Axon to deliver results exceeding its estimate of 30% revenue growth, along with fourth-quarter guidance surpassing its 29% growth projection. This aligns with the company’s impressive trailing twelve-month revenue growth of 32.4% and robust gross profit margins of 60.6%. TD Cowen highlighted the company’s AI product cycle is gaining momentum, particularly in the second half of the year.

Axon shares have risen 10% year-to-date but declined approximately 12% over the past month and sit 25% below recent highs. The stock currently trades at roughly 13 times estimated enterprise value to calendar year 2027 sales.

TD Cowen views the recent 15% pullback since August as unwarranted from a fundamental perspective and considers the current price an attractive entry point. The firm notes Axon’s calendar year 2026 estimated enterprise value-to-sales-to-growth ratio of 0.68x remains well below vertical competitors at 0.98x. For deeper insights into Axon’s valuation metrics and comprehensive financial analysis, InvestingPro subscribers can access the detailed Pro Research Report, featuring expert analysis and key performance indicators.

The research firm believes Axon deserves a premium valuation compared to peers due to its durable end markets, high growth profile, ongoing AI product cycle, limited competition, and strong competitive moat. TD Cowen has adjusted its earnings per share and free cash flow estimates to account for a higher tax rate and working capital requirements. InvestingPro analysis shows the company maintains strong financial health with a current ratio of 2.95 and holds more cash than debt on its balance sheet.

In other recent news, Axon has announced its acquisition of Prepared, an AI-powered emergency communications platform, which is expected to enhance its 911 response capabilities. This acquisition is anticipated to close in early Q4, with pre-announcement estimates suggesting a deal value of around $800 million. JMP Securities has reiterated its Market Outperform rating for Axon, with a price target of $825, following discussions with the company’s Senior Director of Investor Relations. Needham also maintained its Buy rating, with a price target of $870, highlighting the strategic value of the Prepared acquisition.

In product news, Axon unveiled the Axon Body Workforce Mini, a smaller and lighter body camera designed for retail and healthcare workers facing workplace violence and theft. Additionally, Axon has appointed Todd Morgenfeld to its board of directors, expanding the board’s size from ten to eleven members. Morgenfeld’s compensation package includes restricted stock units and cash compensation, reflecting his roles on the board’s Audit Committee and the Mergers and Acquisitions and Capital Structure Committee. These developments reflect Axon’s ongoing strategic initiatives to expand its product offerings and strengthen its leadership team.

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