Taser's Video Losses Will Continue (For Now), But Co. Still Has Significant Growth In International Markets

TASER International, Inc. (NASDAQ: TASR) reported better-than-expected 1Q16 revenues of $55.5 million and non-GAAP EPS of $0.09. Ladenburg Thalmann’s Glenn G. Mattson maintained a Buy rating for the company, with a price target of $24.

Robust 1Q Performance: Video Losses Expected to Grow

Taser’s weapons sales were up 19 percent y/y, driven by a large international order of $6 million. While the video service revenues were up 150 percent y/y, they were short of expectations due to the holding back on shipments of the new Body 2 Camera for quality assurance.

The shipment of these cameras is expected to boost Taser’s video product results in 2Q16, analyst Glenn Mattson stated.

The analyst expects Taser’s operating expenses to grow 35 percent in 2016, as the company looks to expand its US market share besides building a strong international presence. He added, however, that the investment would restrict the company’s future earnings.

Mattson expects Taser’s losses in video to grow from an operating loss of $26 million in 2015 to an operating loss of $41 million in 2016. These losses are expected to peak on a quarterly basis in late 2016 and improve in 2017.

“While the timing of this change is difficult to predict until we get more clarity on the sales expense growth in 2017, we believe this turning point is on the visible horizon and should be a positive for TASR shares,” the Ladenburg Thalmann report stated.