JPMorgan upgraded Axon Enterprise (NASDAQ:AXON) to an Overweight rating (from Neutral) and reiterated their 12-month price target of $236.00 following a 15% decline in share price yesterday post print.
Analysts wrote in a note, “The pullback we were waiting for came sooner than expected, driven by what we see as temporary headwinds ahead of a strong upgrade cycle across body cams (Axon 4) and Taser 10. Gross margins are taking a hit on product mix shift o Fleet and ramp in 2H product releases, which will ultimately drive higher bundle revenue and buoy overall ARR longer term, in our view. Further, the EBITDA margin guide was reiterated, and the raise in revenue guidance should drive higher absolute EBITDA dollars this year, underscoring solid operating leverage in the model despite elevated reinvestments in the business for growth.”
JPMorgan’s downgrade of the company in early March was largely based on valuation. According to the analysts, JPMorgan sees risk-reward more favorable at today’s levels, with an even better outlook on top-line.
Shares of AXON are up 4.88% in afternoon trading on Thursday.