Axon Enterprise is Thursday's IBD Stock Of The Day, as the leading safety technology company is setting up and closing in on a new entry point. Axon shares edged higher Thursday from a key level.
Based in Scottsdale, Ariz., the company offers security and safety solutions for a range of industries, including law enforcement, corrections, personal safety and more. It is best known for its Taser conducted electrical weapons, body-worn cameras and other security devices and systems.
Formerly known as Taser, the company changed its name to Axon Enterprise in April 2017, looking to signal to investors that it has more to offer than only Taser weapons. The Axon name came from the company's unit that sells body cameras, patrol-car cameras and video housing software to law enforcement.
In November, Axon Enterprise reported that revenue jumped 34%, compared to last year, to a record $312 million. Sales were 11% higher than anticipated. The company did report a 49% drop in earnings to 60 cents per share. However, that beat Wall Street estimates by 23%. Axon shares spiked on the earnings beat.
Axon's sales often surge after a mass shooting or other event that drives consumers and businesses to harden their security systems. The company has posted nine straight quarters with profits.
With an eye to expand its software and cloud segment, earlier this month Axon Enterprise received an upgrade to the highest security level by the Federal Risk and Authorization Management Program Joint Authorization Board for its cloud-based Software as a Service (SaaS) solutions.
The change will allow Axon's government customers to store the most sensitive, unclassified data handled by federal civilian agencies.
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Axon Enterprise Stock
Axon shares advanced 0.3% to 165.58 during Thursday's market trading. Shares are down 2% on the week and retreated nearly 9% so far in December. However, Axon Enterprise stock has been trading tightly, in step with the S&P 500, since Dec. 6.
The stock should have a new base at Friday's close, according to MarketSmith analysis, with a 193.95 buy point.
Axon stock has been finding support around its rising 50-day moving average but closed slightly below that level. It's modestly below its 21-day and 10-week lines. A strong move over those levels could offer an early buy point. Investors could use a move above the Dec. 27 high of 172.48 as a specific entry for AXON stock.
However, the stock market is now in a correction, despite Thursday's bounce. Investors should be wary of taking new positions. Any new buys should be small.
Axon stock gapped up nearly 15% on Nov. 9 following earnings. It continued to rise, ending that week up more than 23%. Since then, shares ran into resistance and traded sideways until pulling back earlier this month.
Axon Enterprise will report fourth-quarter earnings in late February. Analysts see Axon earnings per share rising 11% to 51 cents with sales up 40% to $306 million. For 2022, Wall Street predicts earnings falling 15% to $2 per share on the year, according to FactSet. However, analysts expect Axon earnings per share to rebound 33% in 2023 to $2.66.
IBD ranks Axon Enterprise stock first in the Security/Safety industry group. AXON stock has a Composite Rating of 98 out of 99. Its Relative Strength Rating is 97; the RS Rating is an exclusive IBD Stock Checkup gauge for share price movement, with a 1-99 score. The EPS Rating is 83.
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