Taser (TASR) a Buy on Upgrade Cycle and Position in On-Officer Video - Ladenburg Thalmann
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Shares of Taser International (NASDAQ: TASR) have been en fuego recently as the events surrounding Ferguson, Missouri has thrust on-officer video into the spotlight. The technology promises to reduce “use of force” by officers, reduce litigation expenses and would have likely captured the events that led up to the death of the unarmed Michael Brown. The stock is adding to recent gains today after Ladenburg Thalmann analyst Glenn Mattson launched coverage on the stock with a Buy rating and $19.50 price target.
In his report, Mattson highlights Taser's presence in the on-officer video market as well as gains seen in the conducted electric weapons (CEW) business.
The analyst said Taser continues to benefit from an upgrade cycle in its CEW business which started in 2012 after the introduction of the X2, the first in a new line of "smart" weapons. "The market for CEWs in the U.S. is well penetrated with about 1 CEW for every 2 officers, but the weapons in the field had aged prior to the X2 release due to a lack of compelling product offerings from TASER and the 2009 recession," Mattson said. "This aging equipment in the field created a significant upgrade opportunity and we contend we are still in the early stages of the upgrade cycle."
The analyst also sees Taser well on its way to becoming the dominant player in the on-officer video market. "We believe on-officer video will become a universal police tool over the coming decade and recent high-profile events serve to quicken the adoption of this important technology," he said. "TASER has helped spearhead this technology with its Axon line of video cameras. More important long-term will be TASER’s SaaS offering Evidence.com which serves as a secure encrypted web based storage system for the video created by participating agencies. We think that ultimately TASER is looking to use broad adoption of Evidence.com to become a provider of software, systems and services to police agencies. This effort is broadening TASER's ultimate addressable market and moving the company beyond just a niche weapons provider."
The analyst also notes the international market represents a significant opportunity on both the weapons and video segment. He also highlighted the company's "excellent "balance sheet with $48.7 million in cash and no debt. With estimated cash flow f c$0.41 and $0.63, respectively, in 2014 and 2015, they expect cash to grow to $63 million by the end of 2015.
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