Key Takeaways:
- UK Deployment Expansion: Axon Enterprise deepened international adoption with a January 2025 rollout of 160 body-worn cameras across 42 UK fire stations.
- Balance Sheet Action: Axon Enterprise redeemed 0.5% convertible notes due 2027 in February 2026 at 100% of principal, simplifying capital structure as revenue surpassed $2 billion.
- Price Framework: Based on 33% revenue growth and a normalized 63x P/E, Axon Enterprise stock could reach $644 by December 2027 as earnings scale despite margin normalization.
- Return Math: From the current Axon Enterprise price of $434, the $644 target implies 49% upside and a 23% annualized return over roughly 2 years driven by growth, not multiple expansion.
Axon Enterprise, Inc. (AXON) provides public safety technology combining body cameras, conducted energy devices, and cloud software sold on multi-year subscriptions that produced $2 billion of revenue in 2024.
Customers include police, fire, and emergency services globally, where integrated hardware and evidence software matter because agencies standardize vendors at scale, supporting recurring revenue streams exceeding $1 billion annually.
Financially, gross profit reached $1 billion in 2024, operating expenses climbed to $1 billion, and operating income settled near $80 million, reflecting heavy reinvestment alongside a 60% gross margin profile.
Normalized net income totaled $470 million in 2024, while operating margins compressed to 4% as R&D and software expansion outpaced near-term revenue leverage despite EBITDA margins near 25%.
Recent momentum includes a January 2025 partnership with Norfolk Fire deploying 160 Axon Body 4 cameras across 42 UK fire stations, extending adoption beyond policing into fire services and training workflows.
Senior Director Alex Lowe stated, “Our cameras have been invaluable for first responders,” a comment tied to expanding software usage and long-term subscription penetration across 500 emergency agencies worldwide.
As growth remains elevated at 33% annually while valuation compresses from 102x to 63x earnings by 2027, attention shifts to whether execution can sustain scale and support a $644 price target.
What the Model Says for AXON Stock
Axon Enterprise combines recurring software and hardware sales, sustaining 32.8% revenue growth expectations despite normalized 4.9% operating margins.
The model applies 32.8% growth, 4.9% margins, and a 62.8x exit multiple to reach a $644 target price.
From $433.77, the modeled 48.5% total upside and 23.3% annualized return exceed typical equity opportunity costs.
The model signals a Buy, as a 23.3% annualized return provides sufficient compensation for risk under disciplined growth assumptions.
At a modeled 23.3% annualized return versus a typical 10% equity hurdle, the valuation framework reflects meaningful excess return, adequately prices execution risk, and supports a Buy based on sustained growth and multiple normalization.
Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for AXON stock:
1. Revenue Growth: 32.8%
Axon stock delivered 33.2% revenue growth over the last year.
Current execution supports this pace, with expanding international deployments, higher attach rates for cloud evidence software, and growing multi-year contracts that sustain revenue visibility beyond initial hardware sales.
Sustaining 32.8% growth requires continued adoption of body-worn cameras and software ecosystems at scale, while budget delays, procurement cycles, or slower international expansion would pressure growth quickly.
This is slightly below the historical 1-year revenue growth of 33.2%, indicating the model assumes durability at scale rather than continued acceleration, leaving limited tolerance for execution slippage.
2. Operating Margins: 4.9%
Operating margins of Axon stock averaged 9.9% over the last year.
Current performance shows margins compressing toward 4.9% as Axon Enterprise continues to prioritize expansion, international rollout, and software development costs ahead of near-term profitability.
Maintaining 4.9% margins assumes disciplined spending alongside revenue growth, while any inefficiency, contract pricing pressure, or higher personnel costs would further dilute operating leverage.
This is below the historical 1-year operating margin of 9.9%, reflecting continued reinvestment tied to recent international body-camera deployments, expanded software rollouts, and ongoing platform development that keeps near-term margins highly sensitive to contract timing and revenue execution.
3. Exit P/E Multiple: 62.8x
Historically, Axon stock has traded at elevated earnings multiples, with a 1-year P/E of 101.9x.
At exit, earnings are capitalized at 62.8x, reflecting normalized growth with margins near 4.9% and revenue still expanding at 32.8%, embedding scale benefits already assumed in the model.
Relative to the market NTM Price to Normalized Earnings multiple of 62.8x as of 2/9/26, the exit multiple is 1:1 with prevailing market expectations rather than assuming further re-rating.
However, this is below the historical 1-year P/E of 101.9x, indicating the model assumes valuation compression as growth matures, leaving downside exposed if execution falls short across growth and margins simultaneously.
What Happens If Things Go Better or Worse?
Axon Enterprise stock depends on contract expansion across public safety agencies, software adoption depth, and reinvestment discipline, creating distinct execution-dependent scenarios through 2029.
- Low Case: If procurement cycles slow and reinvestment remains heavy, revenue grows near 21.2% with net margins around 18.0% → 16.2% annualized return.
- Mid Case: With core law enforcement demand steady and software attach rates rising, revenue growth near 23.5% and margins improving toward 20.6% → 27.5% annualized return.
- High Case: If international adoption accelerates and platform economics scale efficiently, revenue reaches 25.8% and margins approach 23.1% → 38.8% annualized return.
How Much Upside Does Axon Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
