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TASER (TASR) Rises on Ladenburg Talmann Rating Upgrade

TASER International Inc. 's TASR shares surged 9.37% yesterday, after Ladenburg Talmann raised its rating to Buy with a target price of $24. This is quite a comeback performance by the company as the stock had slipped more than 50% after hitting its 52-week-high of $35.95 in mid June.

TASER recently reported mixed third-quarter results wherein earnings missed the Street expectation while revenues were ahead of the mark. Notably, the company's adjusted earnings per share plunged 78.6% from the year-ago figure reflecting higher operating expenses (opex). (Also read: TASER International Misses on Q3 Earnings, Revenues Up )

According to analyst Glenn Mattson of Ladenburg Thalmann, the main concern affecting the shares of TASER is the rise in operating expenses apart from growing competition in the on-officer video market. A decline in the rate of growth at the weapons segment has resulted in lower EPS estimates into 2016.

However, Mattson thinks that concerns are already priced in and the stock's valuation appears to be "too attractive to ignore." In his opinion, investors should view the higher spending as cap-ex instead of opex.

The analyst further stated that "Taser's weapons business producing solid cash flow, TASR is rightly investing in a very large second end market. TASR is investing in a robust sales channel to capture a significant share of the market early. This results in higher spending negatively affecting EPS, though this is really an investment that if successful will produce a steady stream of revenue from video. We are still cautious on the potential for the international video segment and hesitate to fully endorse the large spending increase allocated overseas until we see further traction."

He believes that TASER has opportunities not only in non-lethal weaponry but also in equipment designed to help law enforcement officers produce videos of their interactions with the public. He further cited that the company has the potential to grab a major London Metro Police contract (as London Mayor Boris Johnson committed to buying 20,000 devices at the conclusion of a trial with TASER cameras). With this TASER might be able to enhance its international footprint with broader adoption in northern Europe.

Based in Scottsdale, AZ, TASER International is engaged in the development, manufacture and sale of conducted electrical weapons designed for use in law enforcement, military, corrections, private security and personal defense.

Zacks Rank

TASER International currently has a Zacks Rank #4 (Sell). Some better-ranked stocks in the defense space include Leidos Holdings, Inc. LDOS , Boeing BA and General Dynamics Corp. GD . While Leidos Holdings sports a Zacks Rank #1 (Strong Buy), Boeing and General Dynamics carry a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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