We're Boosting Our Price Target for This Public Safety Holding

*Axon: Boosting our price target to $415, keeping our two rating, lifting our panic point to $325

*Management’s presentation at the Goldman conference reaffirms growth drivers remain in place

Brittany Bagley, the CFO and COO at Axon Enterprise AXON, gave a very upbeat presentation at the Goldman Sachs Communacopia conference, hitting on several reasons why we’ve been bullish on the company and its shares.

Despite the political environment, Bagley reminded the crowd that the tailwind behind Axon for public safety and transparency has bipartisan support but also that Axon still has ample room to grow its wallet share with its core customer base.

That market is domestic law enforcement, where Axon derives 75% of its revenue while it accounts for roughly 1% of budget dollars. By comparison, at its largest customers that have adopted the company’s full suite of products, Axon accounts for about 3% of budgets. While that may seem small, in dollar terms those are big gains to be had as Axon continues to expand its product offering.

Bagley also discussed markets outside of Axon’s core, including international and enterprise. We’ve known Axon has been chipping away at international for some time, and it is starting to take hold.

During the June quarter, international was around 15% of total revenue but it grew far faster than the overall business. What stood out to us is that Axon’s effort to cultivate customers is leading to a fuller adoption of its products compared to an à la carte approach in the U.S.

Turning to enterprise, we’ve read articles about retailers adopting body cameras for safety and to combat shrinkage, and that’s one area Axon is playing in. Hospitals and other security operations are tucked into its enterprise market.

We see this as a nice area of incremental growth, but the main focus remains greater penetration in international and domestic law enforcement. To that end, Bagley also discussed Axon’s Draft One, which is an AI-driven software that helps law enforcement officers save a lot of time by doing that first draft of a police report. Testing is going well, but we should expect to hear more about customer wins and adoption in 2025. It was also tipped that Axon will have other AI products in the market in the coming quarters, all designed to improve workflow.

Finally, Bagley confirmed our thinking that as software continues to account for a larger part of the company’s revenue mix, it will have a nice impact on margins and bottom-line performance.

With AXON shares bumping up against our $385 target, following Bagley’s comments that made clear the Axon story is far from over, we’re boosting our price target to $415. As we make this move, we’ll also lift our panic point to $325 from $310.

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At the time of publication, TheStreet Pro Portfolio was long AXON.