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Why Axon Enterprise Stock Surged 34% Last Month

By Jeremy Bowman - Updated Feb 4, 2021 at 7:42AM

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Shares of the Taser maker gained on some attractive new contracts.

What happened

Shares of Axon Enterprise (AXON 5.64%) were climbing last month after the company announced a pair of significant new contracts and benefited from an analyst upgrade. According to data from S&P Global Market Intelligence, shares of the law enforcement technology company finished the month up 34%.

The chart below shows the stock's trajectory for the month as shares started running higher on Jan. 12.

AXON Chart

AXON data by YCharts

So what

Axon, which makes Taser stun guns and body cameras and runs cloud-based databases like Evidence.com, jumped 8% on Jan. 12 on news that the Drug Enforcement Administration (DEA) was aiming for an exclusive contract with Axon. The federal government has long been a mostly untapped opportunity for Axon, which gets most of its business from municipalities, so a DEA contract could help open up a huge market for the company.

A yellow Taser electrical weapon

Image source: Axon.

Three days later, the stock got another boost when Morgan Stanley upgraded it to overweight, noting recent contract wins with the federal government and a number of new market opportunities. Analyst James Faucette gave the stock a price target of $185.

That same day, the company announced that the Los Angeles Police Department said it would renew its five-year contract with Axon and had purchased 5,260 Taser 7 weapons and 355 Axon body cameras, making the LAPD its biggest customer. Axon also announced several other large orders including one for 2,100 Taser 7 weapons from Suffolk County, New York.

There was no significant news out on Axon for the rest of the month, but those announcements added to the momentum from the new DEA contract. 

Now what

Axon has been a consistent outperformer as the company's unique collection of products is changing the way law enforcement agencies collect and manage data. Though analysts only expect modest growth in the fourth quarter, the company is executing in a number of key areas like federal government bookings and its cloud-based business, and it's rapidly expanding its customer base as well. With no direct competition across its business, Axon looks poised for solid long-term growth.

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Stocks Mentioned

Axon Enterprise Stock Quote
Axon Enterprise
AXON
$96.16 (5.64%) $5.13
Morgan Stanley Stock Quote
Morgan Stanley
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$77.82 (5.21%) $3.85

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