Axon Enterprise (AXON) offers strong long-term growth prospects driven by demand for its law enforcement technology platform, though much of that outlook is already priced into its shares, UBS Securities said.

The firm said in a note Tuesday that Axon is positioned to deliver 21% annual revenue growth through 2029, supported by continued adoption of Taser devices, body cameras, cloud-based digital evidence platforms, and productivity tools.

Operating leverage is expected to drive further margin expansion, with adjusted earnings before interest, taxes, depreciation, and amortization margins projected at more than 25% over the next several years.

"The business is much larger today, but we see a continuation of margin expansion over the next several years as software continues to expand in the mix and opex investments grow slower than revenue," according to the note.

Axon's drone business represents a newer growth opportunity as public safety agencies expand remote and autonomous response capabilities, the firm said. UBS noted drone deployments remain early but are expected to scale alongside Axon's broader software ecosystem.

While international market expansion may extend Axon's growth runway, UBS said that US demand is coming off a period of acceleration, making year-over-year comparisons more challenging.

UBS also noted the stock trades around 100 times estimated fiscal 2026 earnings, embedding a high level of certainty around Axon's outlook and limiting the potential for further multiple expansion.

The firm initiated coverage of Axon with a neutral rating and an $820 price target.

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