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TASER (TASR) Has Significant Technological Lead Over Digital Ally (DGLY), Others - Analyst

September 2, 2014 2:25 PM EDT
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While Digital Ally (NASDAQ: DGLY) continues to surge on the on-officer video potential, Ladenburg Thalmann analyst Glenn Mattson believes TASER (NASDAQ: TASR) has a significant technological lead over the other body cameras makers, including Digital Ally.

In his initiation report on TASER today, the analyst notes that while the company faces competition from Digital Ally, L3 Communications (NYSE: LLL), Motorola Solutions (NYSE: MSI) and Vievue (Private) they would argue that "TASER has a significant technological lead over the other body cameras by DGLY and Vievue, and that on-officer video will likely replace the in car systems which are sold by MSI and LLL."

Mattson expects the on-officer category will eventually eliminate or greatly reduce the need for patrol car-mounted video, which is currently a $350 million annual market.

The analyst highlights TASER's Axon Flex Camera and Axon Body. The Axon Body has seen solid market acceptance with 2,800 units sold in 2Q:14 more than the 2,000 units sold of the Axon Flex in the same period.

The analyst noted that an August 2013 Federal Judge ruling from Shira Scheindlin that New York City’s stop and frisk policy was unconstitutional in its current form created the national debate. One of the multiple remedies which Judge Scheindlin required the NYPD to implement was a trial program whereby one precinct in each borough (the one with the highest stop and frisk incidents) must have officers wear video cameras. To support her ruling Judge Scheindlin cited the Rialto study which showed that after body worn cameras were introduced public complaints against officers fell by 88% compared to the prior year and
officer’s use of force fell 60%. The second major event was Ferguson. Mattson argues while NYC ruling in 2013 created a national debate, the events of August 2014 have made on-officer video a priority. "We expect that as a result of this incident, on-officer video is moving up the hierarchy of needs among police agencies as they set their 2015 budgets," he said.

Mattson also highlights that the value of on-officer video with regards to TASER will unfold via its cloud offering Evidence.com. The company's Evidence.com not only works with the company's Axon series of cameras, but video from any device (including smartphones or eventually Google Glass (NASDAQ: GOOG) can be uploaded easily to the device-agnostic site. Evidence.com saves time, money and reduces the potential for mishandling, the analyst said.

Shares of Digital Ally are up 68% today to $31.34, while TASER is up 9.5% to $17.16.



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