Taser Could Soon Be Facing Increased Price Competition

TASER International, Inc.’s TASR competitor, VIEVU, has won the coveted NYPD camera contract worth $6 million. The five-year contract is for the delivery of 1,000 cameras, which would ramp over time to 5,000.

Ladenburg Thalmann’s Glenn G. Mattson downgraded the rating on Taser from Buy to Neutral.

What The Contract Win Means

Mattson explained that the downgrade was based on expectations of “a potential shift in the market backdrop coupled with elevated valuations.”

The analyst mentioned that VIEVU’s contract amounts to $20 per camera per month, significantly below Taser’s per camera per month rate, which is usually in the mid to high $40s.

Related Link: How Do Gun Stocks Respond In The Days And Weeks After Mass Shootings?

“We contend that VIEVU may have difficulty making a reasonable return at these terms, but believe the company was likely looking for a reference account that could help it grab further market share,” Mattson stated.

The analyst believes that if VIEVU is unable to deliver a high quality product at the current price point, Taser could theoretically re-bid for the project.

Increasing Price Competition

However, Mattson pointed out that there could be two major risks with this strategy, saying, “First, should VIEVU deliver on this offering, even at a loss, it will be a much more viable competitor able to potentially win other large cities and secondly, in future contract negotiations other municipalities will likely use the NYPD contact as a point of reference.”

The analyst also expressed concern that a lower price point could lead to a new level of price competition.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Posted In: Analyst ColorDowngradesTop StoriesAnalyst RatingsGlenn G. MattsonLadenburg Thalmann
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!