In a shocking development, Scottsdale-based Taser International's stock has soared above $100 a share this week as anticipation mounts for stunning returns this year.
The stun gun manufacturer's Nasdaq-traded stock closed at $101.25 a share Tuesday, down slightly from hitting $103.43 at Monday's close, on volume of 646,809. The stock's 52-week low is $3.65.
“We've been watching this ride up,” said Steven Gish, senior research analyst at Roth Capital Partners. “There's a lot of momentum behind the stock.”
The company is likely to implement a stock split, which would be “very positive because that will increase the flow and allow investors to buy and sell the stock more efficiently,” he said.
Last week, Taser announced at the International Consumer Electronics Show in Las Vegas its intent to roll out this summer a consumer version of its product with an average sales price around $1,000, Gish said.
“Their intent is not to gain significant market share in the consumer market, but more of it to be a unique product for gun enthusiasts who want the greatest and latest new product,” he said. “But I think there could be some hype surrounding that. Some investors believe they are going to move very aggressively into the consumer market. I think they have their hands full concentrating on their key market, which is with law enforcement.”
On the company's Internet site, Taser boasts the following domestic law enforcement statistics:
• 2,766 departments are deploying Taser brand energy weapons.
• 200 departments are currently deploying Taser brand weapons to all patrol
• 86 percent of law enforcement agencies are currently deploying Taser brand technology at the same time or before using pepper spray.
“What's driving it is just basically we're doing extremely well with the domestic police,” said Phil Smith, the chairman of Taser's board of directors. “We've only gotten about 6 percent to 7 percent of police wearing them. Even though a lot of them in Phoenix have them, the rest of the country is still available and we're making great progress.”
Anticipation of Taser's plans for the consumer market also has peaked investor interest, he said.
“Down the road the consumer market will be a big thing, but it's not going to happen in a big way for another year or two because we're so busy just doing law enforcement and military,” Smith said. “That's what we expect to drive it, law enforcement first, military second and consumers would be a couple of years down the road after we're a much bigger company.”
In the meantime, Taser is focusing on law enforcement sales and is making progress in introductory sales to the military, he said.
“We've got units in Iraq on test, several hundred units are over there now and we're getting good feedback on the effect and so forth,” Smith said. “We expect some interesting things from the military to be kind of a second thing.”
The stock jumped more than 1,500 percent last year and “it would be very difficult for the stock to replicate that again in 2004,” Gish said.
“Certainly if the company had a misstep, if they did not meet expectations, I would expect the stock to pull back,” he said. “I think the share price has already reflected all information and expectations for 2004 and probably 2005. So if the company was not to guide revenue to a certain level, or they had some product pushouts or deferments, it would certainly hurt the stock.”
There's no reason for anyone to be concerned that the stock has been pushed too far upward and is likely headed for a drastic fall because the company's fundamentals are solid, Gish said.
“This is a company that we've been seeing revenue and earnings growth of 100 percent,” he said. “They have virtually no competition in their market and they have a very significant amount of upside in terms of their market penetration available to them.”