Taser Could Soon Be Facing Increased Price Competition
TASER International, Inc.’s (NASDAQ: 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.
“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 email@example.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!
Latest Ratings for TASR
|Mar 2017||Imperial Capital||Maintains||In-Line|
|Nov 2016||Imperial Capital||Downgrades||Outperform||In-Line|
|Oct 2016||Imperial Capital||Initiates Coverage On||Outperform|
© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.