This month has been a great one in which to own stock in TASER International (NASDAQ: TASR) -- but the good times may not last.
When TASER reported earnings last Friday, the stock enjoyed
What Imperial did
Imperial explained: "[W]e continue to believe that TASER's unaided brand awareness, very high market share, and its business model [give] it significant leading advantage over competitors in non-lethal weaponry, and the developing business of online forensics and evidence management." I must say, that doesn't sound particularly downgrade-y to me. So why did Imperial change the rating at all?
Why Imperial did it
I think the key here lies in Imperial's $27 price target, and the fact that the analyst didn't change that despite changing its rating. As you can see in the chart above, prior to earnings, TASER stock had spent several weeks trading in the $22-per-share range. In fact, on Oct. 14, when Imperial Capital first initiated coverage on TASER and assigned its $27 price target, the stock still cost less than $23. That gap between $23 price and $27 worth looked like an opportunity to Imperial.
Aside from the stock price, little has changed about TASER's business in the four weeks since Imperial first started coverage. So my guess is that Imperial cut its rating on TASER simply because it had hit its price target -- and Imperial will very likely re-recommend buying TASER if the stock falls much below $27.
Why Imperial likes TASER
Why might that happen? In its original October write-up, Imperial highlighted several reasons that it likes TASER. These include the brand awareness, market share, and razor-and-blade business model, all noted above.
In addition, Imperial pointed out that the
Granted, TASER's Axon body-camera business
Long story short, Imperial is probably right that after its recent spike in price, TASER shares are no longer cheap enough to buy. (After all, according to data from
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