Results From Motorola Say Our Axon Thesis Is Tracking
That Motorola is seeing accelerated adoption of cloud offerings is a good signpost.
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* Earnings and lifted 2024 revenue expectations at Motorola Solutions support our position in Axon shares
* Here’s what we’ll be watching when Axon reports after the market close on Monday, May 6
Last night Motorola Solutions MSI delivered a consensus-beating March quarter earnings report and lifted its outlook for the current quarter ahead of market forecasts.
The company’s record-setting backlog of $14.4 billion, up 2% year over year and up modestly on a sequential basis, prompted management to up its 2024 revenue guidance to +7% year over year from +6%. Not the biggest upward revision, but it supports the spending strength that is being had in the public safety market.
As we’ve discussed with members in the past, quarterly results and guidance from Motorola Solutions have signaled what we’re likely to hear from Axon AXON when it reports its quarterly results.
Motorola’s conference call comment that it is seeing accelerated adoption of cloud offerings is a signpost that our thesis for Axon is on track. Axon will benefit from public safety spending, but it’s the mix shift toward the higher margin, recurring cloud revenue stream that will drive EPS and incremental margin expansion.
Ahead of Axon’s earnings report after the market close on Monday, May 6, we are maintaining our $330 price target. If the company’s backlog grows more than expected or its margin profile shows the need to rethink operating margin and EPS expectations, we may need to boost that price target.
At the time of publication, TheStreet Pro Portfolio was long AXON.
