Shares of Axon Enterprise Inc. (NASDAQ:AAXN) initially soared Thursday after it announced its partnership with drone manufacturer DJI to sell surveillance drones to US law enforcement agencies.
However, JP Morgan analysts weighed in to say they expect Axon shares to take a "breather."
“Great as the business is going, Axon stock," argues JP Morgan, "has come too far, too fast, and could remain 'range-bound' for the foreseeable future,” reported The Motley Fool.
As a result, the analyst downgraded Axon to Neutral, but kept a US$66 share price target.
Axon which shot up to US$67.90 on the drone partnership news reversed 6.5% down to US$63.46 on the analyst downgrade.
Building new partnerships
Through the Axon Air program, the police will be able to purchase DJI’s Phantom 4 Pro, Inspire 1, and Matrice 210 drones, together with Axon’s Evidence.com network, which is a cloud data management system which preserves footage from body cameras and in-car video cameras.
More than 200,000 public safety professionals use the Evidence.com platform designed to protect the chain-of-custody of evidence collected by drones, according to Axon.
The company said that within Evidence.com “the integrity of drone videos” is preserved for the protection of police agencies and the public they serve.
"As the requirements and demands of unmanned aircraft programs grow, Axon is partnering with agencies to build out solutions that meet the complexities and requirements of public safety," said Axon's EVP of Worldwide Products, Todd Basche.
"Together, we will focus on creating situational awareness, advanced evidence collection and program management tools that will allow agencies to manage their drone program alongside their body camera and in-car video systems."
Media website CNET pointed out that more and more police departments are adopting drones, “creating tension between public safety and privacy concerns.”
Axon, a Scottsdale, Arizona-based company also makes Tasers and body cameras used by police departments around the country.
Headquartered in Shenzhen, widely considered China’s Silicon Valley, DJI is a market leader in easy-to-fly drones and aerial photography systems.
-- Correction: The company's name was misidentified in an earlier version of this article. --