TASER slides after rival awarded NYPD body camera contract
Shares of TASER (TASR) are sliding after the New York City Police Department awarded a contract to supply police body cameras to the company's rival Vievu, according to the New York Daily News. Noting that the agreement only amounts to $20 per camera per month, Ladenburg analyst Glenn Mattson downgraded TASER to Neutral, saying that this "severely-below-market contract" could be the opening to a new level of price competition. BODY CAMERAS CONTRACT: According to a report on Friday by the New York Daily News, New York City has agreed to spend over $6M to purchase 1,000 body cameras for the police. The five-year contract with TASER rival Vievu will provide "for the provision of a complete and comprehensive body camera system using a Cloud-based storage solution," the report said. PRICE MAY BECOME AN ISSUE: Following the news, Ladenburg's Mattson downgraded TASER to Neutral from Buy, saying the missed NYPD contract could signal increased price competition, marking a change in the marketplace where price becomes an issue. The analyst noted that the $6M contract for 1,000 cameras ramping over time to 5,000 awarded to Vievu amounts to $20 per camera per month, which is far below TASER's average per camera in the mid-to-high $40's. Mattson recalled that many cities' councils have raised concerns regarding the total cost for video solutions in the past, and warned that municipalities are likely to look to New York City when determining pricing going forward. UNPROFITABLE DEAL: After the NYPD issued a public hearing notice for a proposed contract for Vievu, Craig-Hallum analyst Steven Dyer said it appears TASER's rival is providing free body cams to 5,000 officers at the beginning and believes it has agreed to a "significantly unprofitable contract." The analyst told investors that he thinks TASER had the best end-to-end solution of the 54 vendors who bid on the NYPD deal, and simply elected not to take an unprofitable deal. While Dyer sees the news as "obviously disappointing" for TASER, he pointed out that the company remains "the dominant force" in the domestic body-worn video market and is rapidly becoming the dominant player internationally. While he will be watching for downward pressure on future body cam deals, the analyst reiterated a Buy rating and $33 price target on TASER's shares. PRICE ACTION: In afternoon trading, shares of TASER have dropped over 14% to $24.58.