Axon Enterprise, Inc. AXON is poised to benefit from persistent strength across its end markets, a healthy demand environment, acquired assets and focus on operational efficiency. The company remains focused on investing in growth opportunities and strengthening its long-term market position.

AXON, which has a market capitalization of $46.2 billion, currently carries a Zacks Rank #2 (Buy). Let’s delve into the factors that have been aiding the company for a while now.

Strength Across End-Markets: Axon has been benefiting from solid demand for TASER devices and cartridges for a while now. Strong sales from virtual reality training services have been driving the TASER segment. Driven by strength across its end markets, the segment’s revenues increased 36% year over year in the third quarter of 2024. The company’s next-generation energy device, TASER 10, has been witnessing strong customer response, which is contributing to the growth of the TASER segment.

The addition of new users and associated devices to the AXON network is augmenting the Software & Sensors segment. Revenues from the segment surged 28.7% year over year in the third quarter of 2024. Strong momentum in Axon Evidence and cloud services, supported by growth in the aggregate number of users, average revenue per user and software add-ons, is also driving the segment’s performance.

Solid 2024 View: The strong response for Axon Body 4 camera and TASER 10 device led Axon to provide bullish guidance for 2024. The company expects revenues of $2.07 billion, indicating growth of approximately 32% on a year-over-year basis. Axon expects adjusted EBITDA of $510 million in 2024, with a continued margin expansion from 2023.

AXON’s Price Performance

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Over the past six months, it has gained 89.6% compared with the industry’s 17.1% growth.

Strategic Partnerships: In June 2024, Axon entered into a partnership with Skydio (a leading U.S. drone manufacturer) to introduce a comprehensive line of drones in public safety that includes a scalable Drone as First Responder (DFR) solution. The combined offering will support Axon’s DFR programs across its customer base and strengthen its market position in this category. In addition, the company continues to invest in and support DroneSense, an Axon ecosystem partner and leading provider of Drone software.

Acquisition Benefits: In January 2024, the company acquired Fusus, a leader in real-time crime center technology. The buyout will combine Fusus’ real-time situational awareness expertise with Axon's innovative public safety technology, thereby enhancing safety and security for its customers in public places. Also, in October 2024, the company acquired Dedrone, a global leader in airspace security. The inclusion of Dedrone’s advanced airspace technology will boost Axon's capability to enable customers to protect their communities against drone threats and improve response to critical incidents.

Other Stocks to Consider

We have highlighted three other top-ranked stocks, namely AAR Corp. AIR, Kratos Defense & Security Solutions KTOS and Leonardo DRS, Inc. DRS, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

AAR delivered a trailing four-quarter average earnings surprise of 3.9%. In the past 60 days, the Zacks Consensus Estimate for its fiscal 2025 earnings has increased 3.9%.

Kratos Defense delivered a trailing four-quarter average earnings surprise of 70.6%. In the past 60 days, the consensus estimate for KTOS’ 2024 earnings has been stable.

Leonardo delivered a trailing four-quarter average earnings surprise of 22.3%. In the past 60 days, the Zacks Consensus Estimate for DRS’ 2024 earnings has increased 2.2%.

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