New Axon Price Target After Beat-and-Raise Quarter
AI adoption should further the favorable margin mix shift for this public safety leader.
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We are lifting our price target on Axon Enterprise AXON shares to $700 from $625 following Wednesday night’s beat and raise March quarter.
For the March quarter, Axon posted EPS of $1.41 on revenue of $603.6 million, up more than 30% year over year, topping the market forecast of $1.27 on $586.39 million in revenue. The higher margin Software & Services segment grew 39% year over year to account for 43.5% of total revenue in the quarter. This positive margin mix shift has been a key part of our thesis on AXON shares, and we see that shift continuing as the company continues to cross-sell products to customers and its AI efforts translate into revenue in 2H 2025.
Annual recurring revenue during the March quarter grew 34% year over year to $1.1 billion, and exiting the quarter, the company’s deferred revenue topped $1 billion, while its future contracted bookings rose to $9.9 billion compared to $7.0 billion exiting the year-ago quarter. That combination led Axon to lift its 2025 guidance to $2.60 billion to $2.70 billion in revenue, up from $2.55 billion to $2.65 billion, and boost its adjusted EBITDA forecast to $650 million to $675 million from $640 million to $670 million.
Earlier this week, we discussed that the short interest level as of mid-April was around 1.5 million shares, equating to two days to cover. Odds are that is helping contribute to the strong post-earnings reaction we are seeing in the shares on Thursday, placing them near not only our revised price target but near those from Morgan Stanley’s $695 target and less than 10% away from the new $750 target at Needham. It also has the shares in overbought territory with a relative strength index reading near 73. Those factors lead us to maintain our Two rating on AXON shares.
Over the next few weeks, the Axon management team will be pounding the pavement, meeting with institutional investors at the following conferences:
- Monday, May 12: Needham Technology, Media, & Consumer 1x1 Conference
- Wednesday, May 14: J.P. Morgan 53rd Annual Global Technology, Media and Communications Conference
- Wednesday, May 28: TD Cowen 53rd Annual TMT Conference
- Tuesday, June 3: Baird 2025 Global Consumer, Technology and Services Conference
- Thursday, June 5: William Blair 45th Annual Growth Stock Conference
Our plan will be to compare management’s comments about the burgeoning AI effort and trends during the quarter to revisit our price target as needed. Barring any revisions to our price target, should we see AXON shares trend meaningfully higher from here, the prudent move would be to lock in a slice of those gains.
At the time of publication, TheStreet Pro Portfolio was long AXON.
