Taser maker Axon leads S&P surge

Taser maker Axon continued to bask in earnings afterglow Thursday.

The stock was on track for a nearly 15% gain in the final hour of the session while collecting a rave review from equity analysts at Morgan Stanley. They upped their price target on the shares to $695 from $635, maintained their “overweight” rating, and called Axon’s nosebleed valuations warranted, given company’s track record of generating growth.

They wrote:

“Our overweight thesis on Axon reflects our view that the 25-30% growth rate the company has been putting up is becoming more durable as software continues to grow as a portion of the model.”

The company’s better-than-expected results yesterday were driven, in part, by its software and services division, which sells software for digital evidence management, police recordkeeping, and officer dispatch. That unit saw sales rise 39% to $263 million in Q1.

Morgan Stanley analysts noted it was the company’s fifth straight quarter of 30% growth or more in overall revenues.

“While we do remain mindful of valuation,” they said of Axon’s 100x price-to-earnings multiple, “we also believe this premium is warranted given the magnitude (and durability) of growth we are seeing across numerous vectors in the business.”