TASER Loses Its Outperform Rating At Imperial, Maintains Its Position As Market Leader

Following its review of TASER International, Inc. (NASDAQ: TASR)'s third-quarter results, Imperial Capital lowered its rating on the shares of the company, although it maintains its price target. The firm premised the action mainly on valuation, as the stock has run up sharply since its mid-October report and is now barely above its price target.

3Q Review

Analyst Jeff Kessler noted that the company reported third-quarter revenues of $72 million, up 43 percent year-over-year, and ahead of his estimates. Weapons and Axon segments' revenues both rose year-over-year and beat his estimates. The analyst also noted that adjusted earnings per share and EBITDA also exceeded his estimates.

Gross margin of 64.6 percent rose 2.9 percentage points, with Weapons and Axon segments also outperforming on the metric, the firm said.

Raising Estimates

Based on the above-par results and the management's updated guidance, the firm raised its 2016 to 2018 estimates. The 2016 EPS estimate goes to $0.32 from $0.29, 2017 to $0.52 from $0.44 and that of 2018 to $0.61 from $0.51. Likewise, the firm raised its 2016, 2017 and 2018 revenue estimates to $257.39 million, $298.43 million and $322.57 million, respectively from $239.52 million, $275.24 million and $308.35 million.

TTM Statistics

The firm presented the company's fundamental statistics for the trailing-twelve months ended September 30, 2016:

• Revenues: $242 million.
• Adjusted EBITDA: $43 million.
• Adjusted EPS: $0.30.
• Cash And Cash Equivalents (as of September 30): $96 million.
• Total Debt (as of September 30): $51,000.

Lowering Rating

The rating is lowered to In Line from Outperform, while the price target was held at $27. The firm said it continues to believe that TASER's unaided brand awareness, very high market share and its business model gives it significant leading advantage over competitors in non-lethal weaponry and the developing business of online forensics and evidence management.

In pre-market trading, shares of TASER were down 2.54 percent at $26.14. At last check, however, TASER has rebounded slightly to trade at $26.66, down 0.6 percent on the day.

Image Credit: By Junglecat (Own work) [CC BY-SA 3.0 or GFDL], via Wikimedia Commons