Axon Enterprise (AXON) Stock: Analysts Think the Stock Is 4% Overvalued Today

Key Takeaways:

• The 2-Minute Valuation Model values Axon Enterprise stock at $640 per share in 2 years.
• That’s a potential 8% downside from today’s price of $693.
• Axon is expected to grow its earnings at a rate of 13% annually through 2027.
• The stock trades at a premium of 111x forward earnings, significantly higher than its historical average.
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Axon Enterprise (AXON) has emerged as a dominant player in public safety technology, providing law enforcement agencies with TASER devices, body cameras, and cloud-based evidence management systems.

While AXON stock has performed well in recent years, investors are wondering if it would still be a good stock to buy today at current prices.

Let’s analyze Axon’s growth trajectory and valuation to determine if the stock represents a good investment opportunity today.

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What is the 2-Minute Valuation Model?

Three core factors drive a stock’s long-term value:

1. Revenue Growth: How big the business becomes.
2. Margins: How much the business earns in profit.
3. Multiple: How much investors are willing to pay for a business’s earnings.

Our 2-Minute Valuation Model uses a simple formula to value stocks:

Expected Normalized EPS * Forward P/E ratio = Expected Share Price

Revenue growth and margins drive a company’s long-term normalized earnings per share (EPS), and investors can use a stock’s long-term average P/E multiple to get an idea of how the market values a company.

Does Axon Stock Look Overvalued?

Forecast

Looking at Axon’s earnings forecast chart, we can see an interesting pattern. After marginal growth in 2025, Axon is projected to expand its earnings by 22% in 2026 and by 15% in 2027.

This pattern suggests the company’s long-term growth trajectory remains intact despite near-term fluctuations.

This earnings growth for Axon stock is likely to be driven by:

• Dominant Market Position: Axon has established itself as the clear leader in law enforcement technology, with high switching costs once agencies adopt its ecosystem of products.
• Recurring Revenue Model: It has successfully transitioned to a SaaS model for many of its products, providing stable, recurring revenue streams that investors value.
• International Expansion: While Axon has strong penetration in the U.S. market, global regions represent a significant growth opportunity that is still in early stages.
• Adjacent Market Opportunities: The company is expanding beyond law enforcement into corrections, military, emergency services, and commercial security markets.

View Axon’s full analyst estimates (It’s free) >>>

Is AXON Stock a Good Buy Today?

Axon’s historical valuation shows that the market has consistently valued the stock at premium multiples.

AXON stock has averaged a forward P/E of 83x over the past five years, with peaks above 160x during growth phases.

Currently, Axon trades at 111 times forward earnings, which is above its historical average but below previous peaks.

This premium multiple reflects Axon’s unique position in the law enforcement technology market and its consistent revenue growth.

For our valuation, we’ll use a forward P/E multiple of 80x, which is more conservative than the current multiple but still acknowledges Axon’s premium position.

Fair Value of AXON Stock

Using our 2-Minute Valuation Model and applying a conservative approach:

• Conservative 2027 EPS estimate: $8
• Conservative forward P/E multiple: 80x

Expected Normalized EPS ($8) * Forward P/E ratio (80x) = Expected Share Price ($640)

The 2-year expected Axon stock price we would get from this valuation is $640 per share.

With AXON stock currently trading at around $693, this implies a potential downside of approximately 8% over the next two years, or a -4% annualized return.

Keep in mind, this is just a valuation exercise, and we don’t know for sure what the stock’s price will be in the future.

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Analysts’ Price Target for Axon Stock

Analysts have an average price target of around $667 per share for AXON stock, indicating they see about 4% downside for the stock from its current share price:

Risks to Consider for AXON Stock

• At over 100 times forward earnings, Axon stock trades at a premium to the broader market, making it vulnerable to selloffs if growth slows.
• As a company that sells primarily to government agencies, Axon is exposed to potential budget cuts or spending delays.
• While Axon currently dominates its market, larger technology companies could potentially enter this space as the market grows.

TIKR Takeaway

Axon Enterprise represents a high-quality business with strong growth prospects, but its premium valuation may limit near-term returns.

With analysts projecting approximately 4% downside and our model suggesting negative returns over two years, Axon might be best suited for long-term investors who believe in the company’s ability to maintain its dominant market position and expand into new markets.

For investors prioritizing growth over valuation, Axon’s consistent execution and sizeable addressable market may justify the premium multiple. However, those seeking value might find better opportunities elsewhere in the current market.

Is Axon stock a buy over the next 24 months? Use TIKR to check the stock’s analyst price targets, growth forecasts, and see if the stock is undervalued today.

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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!