JPMorgan Downgrades TASER Int'l (TASR) to Neutral; Still Sees as Leader in 'On-Officer' Video Market

(Updated - December 3, 2014 10:50 AM EST)

JPMorgan downgrades TASER International (Nasdaq: TASR) from Overweight to Neutral with a price target of $20.

Analyst Paul Coster cites valuation on the move. The stock has increased 94% since the beginning of August (S&P 500 up 7%) primarily owing to increased interest in on-officer video following the events in Ferguson, MO. The stock has gone through our $20 price target, and although we remain positive on TASR’s growth prospects, we are going to the sidelines at this price level,, the analyst noted.

Coster isn't making changes to its fundamental outlook on TASER, saying, We remain constructive on TASR’s growth prospects owing to the ongoing CEW upgrade cycle, international expansion, and first-time adoption of Evidence.com. We believe on-officer video will eventually become ubiquitous and that TASR is well positioned to be a leader in the market. Our estimates are unchanged, which project three-year revenue CAGR of 12% (58% Evidence.com CAGR) and EPS CAGR of 22%. While we believe there could be upside to our revenue forecasts owing to potentially faster than expected adoption of Evidence.com and/or a longer than expected CEW upgrade cycle, we also believe that revenue upside would be associated with increased opex spend, and our forecasted operating margin expansion to 28.7% in FY16E, from 20.7% in FY14E, could be aggressive. We therefore have relatively more confidence in our EPS estimates than our revenue estimates given the difficulty in forecasting revenue during this phase of the adoption cycle.

For an analyst ratings summary and ratings history on TASER International click here. For more ratings news on TASER International click here.

TASER International closed at $23.34 yesterday.

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