Wednesday, January 03, 2007

Calls of Note Part 2

- Jefferies notes that electrifying performance from Taser (NASDAQ:TASR) during 2007 is their prediction because they believe more U.S. law enforcement agencies have included Tasers in their 2007 budgets, international opportunities appear to keep growing, and new products broaden the scope of the business.

Financial performance likely provides positive surprises in 2007. jefco's revenue estimate of $105 million assumes market penetration expands by 10% during the year, from ~25% to ~35%, due to more police agencies including Tasers in their budgets. A 10% increase translates into approximately $80 million of revenue since there are around 800,000 U.S. law enforcement officials and the average initial purchase is $1,000 for the X26 and cartridges They estimate ROIC improves to over 80% in 2007, driven by a 32% operating margin and capital turnover of almost 5x.

With 30 lawsuits either dismissed or decided in the company's favor, and none decided against the company, the perceived legal risks should decline. Fourth quarter weakness likely in stock, but may hold back stock performance until reported.

Reits Buy and $13 tgt.

Notablecalls: Something for both traders and investor types.

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