Index falls as earnings results weigh; pound above $1.33, Bodycote soars
On Monday, Goldman Sachs analyst Michael Ng increased the price target on Axon Enterprise (NASDAQ:AXON) shares to $700 from the previous $500, while reiterating a Buy rating on the stock. Currently trading at $610.32 with a market capitalization of $46.54 billion, Axon has demonstrated impressive momentum with a 142.81% return over the past year. According to InvestingPro analysis, the company appears to be trading above its Fair Value. The adjustment comes with a positive outlook on the company's financial performance, specifically regarding its fourth-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA) for the year 2024.
Ng's analysis suggests that Axon is expected to report a robust $148 million in EBITDA for the fourth quarter of 2024, which is above the consensus estimate of $134 million by StreetAccount. The company has been showing strong execution, with InvestingPro data revealing a substantial 32.32% revenue growth in the last twelve months. This projection aligns with Axon's own forecast, which anticipates second-half bookings for 2024 to be on par with the total bookings for the year 2023, estimated to be around $4 billion by Goldman Sachs.
The analyst anticipates that Axon will conclude the year with approximately $10 billion in future contracted revenue and around $5 billion in bookings for 2024. Assuming that Axon will recognize 25% of its future contracted revenue in the subsequent twelve months, the company is expected to achieve at least 20% year-over-year revenue growth in 2025, which is consistent with current consensus estimates and could lead to approximately $2.5 billion in revenue.
Ng notes that Axon's sustained revenue growth trajectory and strong visibility support the company's premium valuation, which stands at 67 times the projected EBITDA for 2025. Moreover, when considering Axon's current order run-rate of $5 billion, valuations could appear even more attractive, implying roughly 30 times enterprise value to EBITDA assuming 30% EBITDA margins.
The report also highlights several significant deals secured by Axon, including a $239 million agreement with the Royal Canadian Mounted Police, showcasing the company's momentum in order acquisition. Additionally, the report covers an overview of Axon's key software products beyond their core function of collecting and storing evidence.
With the new 12-month target price of $700 reflecting a valuation of 30 times the next twelve months plus one year enterprise value to gross profit, Goldman Sachs' stance on Axon remains optimistic. InvestingPro subscribers have access to over 20 additional valuable insights about Axon, including detailed valuation metrics, financial health scores, and comprehensive analysis. The company maintains strong financial health with a current ratio of 2.96x and holds more cash than debt on its balance sheet, supporting its premium valuation multiples.
In other recent news, Axon Enterprise has been the focus of several analyst evaluations. TD Cowen initiated coverage with a Buy rating, citing Axon's robust market position and the potential for strong Q4 bookings. Andrew Sherman, the firm's analyst, set a price target of $700, fueled by Axon's anticipated success with TASER 10 and Body 4 product cycles, and advancements in artificial intelligence.
Raymond (NSE:RYMD) James analyst Brian Gesuale revised the price target for Axon to $645, seeing the recent 20% stock correction as a buying opportunity. He anticipates Axon's cloud revenue to reach $1.5 billion by 2026, a projection higher than his previous model. Similarly, Baird raised its stock price target for Axon to $800, highlighting the company's growth prospects in artificial intelligence.
Morgan Stanley (NYSE:MS) upgraded Axon's stock from Equalweight to Overweight and increased the price target to $700. The upgrade reflects confidence in the sustainability of the company's growth rate, attributed to robust police tech budgets and Axon's competitive edge in AI solutions. All these developments highlight the recent positive outlook for Axon Enterprise.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.