We've Got Our Eyes on This Public Safety Play
Amid rising market concerns, here’s what we’re focusing on right now.
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Despite receiving a fresh price target boost today, following one from JPMorgan late last week, shares of Axon Enterprise AXON are under renewed pressure Tuesday. The moves come on no new information, but we do know the stock’s beta makes it one that is likely to swing as the market does when the market is more volatile. However, we also know the company has multiple revenue drivers ranging from international and enterprise adoption for its body cameras, drones, higher margin cloud services, and burgeoning AI tools that are a revenue and profit sweetener.
That combination led Axon to lift its 2025 outlook back in early May, which was backed by its more than $1 billion in deferred revenue and future contracted bookings of $9.9 billion. The company expects to convert 20%-25% of that future contracted bookings figure over the next 12 months, with the balance spread over the next several years. We see that bookings figure in the same vein as the Atlanta Fed’s GDPNow forecast, a rolling update.
We last picked up AXON stock earlier this month at a price a tad higher than the current one, and while we would like to own even more in the Pro Portfolio, given our comments this morning, we’re not inclined to chase. Rather, we’ll heed the stock’s technical setup, which shows the next layer of support at the 100-day moving average, near $660.
Ahead of Axon’s June-quarter earnings report, slated for August 9, we should receive results from Motorola Solutions MSI, which in the past have been a good indicator of what's to come from Axon. Motorola has yet to announce its reporting date, but based on past reporting dates, the company should once again precede Axon’s next reporting date. Those learnings could see us pick more AXON shares if they are hovering near the $725 pick-up point we discussed yesterday.
Lastly, while we recognize order patterns for Axon’s products and services can be lumpy quarter to quarter, if we see a meaningful drop in Axon’s future contracted bookings figure for Q2 2025, that would be a potential red flag for us.
At the time of publication, TheStreet Pro Portfolio was long AXON.
