Byrna Technologies Inc. (BYRN) is a TOP TIER INFLECTION with the potential to become the next Axon Enterprise Inc. (formerly TASER) for consumers.
A number of catalysts are poised to unfold over the next 6-12 months that will propel Byrna’s growth-rate to exciting new levels.
Most importantly, the company will be launching a new compact version of its existing non-lethal self-defense launcher products. With consumers already clamoring for a smaller, concealable BYRNA launcher, we believe this new product will spur a major upgrade cycle from its established 500k Customer Base along with a groundswell of New Customers excited to “pull the trigger” on this innovative home-protection solution.
We are looking for material upside to consensus forward Revenue and EPS estimates for the next two fiscal years. This dispersion between consensus and our projections – we see 50-60% Top Line Growth and 400% EPS Growth over the two years – provides discerning investors an opportune time to accumulate shares at current levels.
To wit, in two years, we see Byrna posting $175-$200M+ in Revenues, along with $1.50-$2.00 in EPS. Take a look at the current estimates below:
This kind of stellar organic Top Line Growth and powerful EPS Growth creates the underpinnings of a meaningful re-rate higher in BYRN the next 5 quarters.
We think such growth could lead to a 30-40x forward P/E, which would get the stock to $45-$60.
Given our high-conviction in the name, $40 seems like a conservative long-term level for BYRN. As such, we are buying every dip in the coming days and plan to have a full position on before the company reports in early October.
A year ago, Byrna's ads were banned on Facebook and Google, causing a big disruption in their sales. Management quickly pivoted to a compelling new marketing strategy: Celebrity Endorsements. Focusing on conservative political commentators like Sean Hannity, Bill Reilly and almost a dozen more, has proven to be a masterstroke. Since then, sales have rocketed to all-time highs. Take a look:
More recently, in what was a very tough summer quarter for gun manufacturers like Smith & Wesson, Byrna pre-announced a huge inflection quarter:
Byrna Technologies reports preliminary Q3 revenue $20.8M, consensus $16.06M.
Based on preliminary unaudited results, the Company expects total revenue for the fiscal third quarter of 2024 to be $20.8M compared to $7.1M in the fiscal third quarter of 2023. This 194% increase in revenue was driven by both Direct-to-Consumer as well as strong Dealer & Distributor sales.
The Company attributes this record sales performance to the continued success of Byrna's marketing strategies, including its celebrity endorsement campaign which it kicked off in the fourth fiscal quarter of 2023.
While skeptics might argue that Byrna is seeing demand inflect in the near-term due to the uncertainty related to the upcoming Presidential election, we think otherwise. Considering the company's success in a rough summer month for its main competitors, we believe the inflection at hand is not just sustainable, but poised to go into overdrive.
In the next three months, Byrna is planning to launch 4 new retail stores. Each story could do $1-$2M in Revenues in 2025. This is not crazy, as the company has an 80% conversion rate in its stores, where potential customers can hold and test-fire the Byrna launcher. Compare that rate to the 1.5% conversion rate the company garners online.
Longer-term, we think Byrna's retail strategy could support 100 stores. Keep in mind that these stores are highly-profitable, requiring only 3 employees to mind the premises. The model is also highly-franchisable, which could act as another important growth catalyst later in 2025 and beyond.
Some additional 411 on the retail strategy is found on the following slide:
As we look ahead to 2025, what makes us incredibly bullish on Byrna's long-term prospects is simple. The company appears set to release its MOST IMPORTANT PRODUCT EVER in late Winter/early Spring.
To this end, consumer surveys taken by the company have all shared one common theme: Consumers are clamoring for a fully-concealable, 30% smaller Byrna that can fit in a suit jacket pocket or inside a small purse. Well, the compact Byrna is coming and could be on the shelves as early as February/March of 2025 (Management has guided to a summer release, but we think they are under-promising and over-delivering here.)
Think about it. Byrna has had 500k consumers purchase its launchers over the last 8 years. IF A THIRD of them buy a second Byrna that translates to a $100M upgrade cycle in the next 18 months. Consider that most gun owners own 3.5 guns, it’s not unreasonable to expect a 2nd or 3rd Byrna purchase.
IF HALF buy the new compact version, this would be a ~$150M upgrade cycle.
Byrna has never had an upgrade cycle like this ever before. We expect the compact version to become its flagship product. Importantly, it will be priced 20% higher and also carry much higher gross margins. This will lead to its business model becoming incrementally profitable. More on that, shortly.
There is precedent for this upcoming upgrade cycle.
Sig Sauer is a gun manufacturer who released a compact version of its flagship product. Within 3 years, its sales went from $200M to $1B.
While we are not expecting the same kind of J-curve in Revenue, we think Byrna is about to see its most notable period of growth, with Revenue Growth poised to potentially re-accelerate back to Triple-Digit Levels as we exit next year.
What makes us believe this upgrade cycle is going to be significant is simple: COO John Brasseur, the exec who spearheaded it at Sig Sauer, has been with Byrna for almost 14 months. He left a billion dollar company to come to one doing less than $75M a year in sales. John has already had a positive effect:
During my conversation with Byrna CEO Bryan Scott Ganz last week, we learned that the dimensions of the upcoming Byrna Compact Launcher are exactly the same as the uber-successful Sig compact. The Byrna Compact will open up its TAM to those looking for fully-concealable product and, also, to the fastest growing segment of new gun buyers: WOMEN.
When we think about where numbers can go, we see a HUGE DISPERSION to current forward consensus, relative to likely forthcoming Revenues and EPS. Here is what consensus looks like the next two fiscal years at B. Riley:
Retail stores could add ~$5-$6M of Revenues next year and $10-$20M the year after that. With two full quarters where the Upgrade Cycle is kicking after the Byrna Compact comes out, we see $115M in FY’25 Revenues. This compares quite favorably to where B. Riley (~$97M) and Consensus ($95.4M) sits collectively.
Thereafter, we think Byrna can do $175M-$200M in FY’26 as the Upgrade Cycle crests.
Importantly, with Byrna already profitable and generating cash at ~$20M a quarter, we see strong potential for bottom line leverage to manifest, one that will usher in a jaw-dropping 400% EPS Growth Inflection two years out. So instead of earning $0.29 two years out, we see strong potential for $1.50 in EPS.
Currently, Byrna is operating one shift in its manufacturing plant in Indiana. They can do up to $30M a quarter with this one shift. So, as revenues scale from ~$20M a quarter to $25M and then $30M a quarter, the bottom line profitability is poised to scale and handily surpass current estimates. Eventually, this will attract the Big Boy Momo Crowd.
We can already see Jonah Lupton recommending Byrna in 12 months when it is trading at $30-$40. At that point, we would expect him to predict $100 for the stock based on its incredible rate of growth.
For us, we think BYRN will re-rate to 6x Forward Revenues. There is incredible scarcity value here.
First, we have a company with a product its customers love, about to release their most important new product ever. As for why we think customers love their products, if you read the comments below, the appeal of the Byrna becomes readily apparent:
Great alternative to firearms. My wife and daughters afraid to use Real Guns.
Very quiet. Easy to Use.
Looks real enough to scare… Good deterrent.
Don't want to shoot anyone EVER!
Always worried about having a REAL firearm in the house!
I appreciate owning a non-lethal firearm for household security.
Shoots really well, feels strong, is very accurate and overall just feels good… 10/10 would buy again and will be recommending.
Visual deterrent to crime... Serious 9mm look-a-like... This fits the bill for many Seniors... easy to load... easy to carry... potent... no permit required.
Excellent kit and you can feel the quality and care of the production in every piece. Feels good in the hand, minimal recoil, definitely packs a punch."
Although this device is non-lethal, it can definitely pack a punch. Its kinetic projectiles are capable enough to breakthrough car windshields and glass bottles…Highly reliable for On-the-go or Home protection.
While looking for less-lethal home defense, I've gone the route of tasers and canister spray. Eventually the Byrna caught my eye. After delivery, the pile of eco-ball splatter, and spent C02 cans convinced me. Easy to deploy. Less scary to your family, yet aggressive enough to do what it claims.
This is a self defense weapon that may not kill, but it does pack a kick. If taking a person's life in self defense does not sit well with you, then the Byrna is for you. Practicing with the Byrna and taking a course in self defense with a gun will increase your chances at handling a threatening situation.
Many consumers are looking for a practical, NON-lethal alternative to guns but one that instills confidence and a strong sense of security. In other words, while people certainly wish to be able to defend themselves, many are morally conflicted by the idea of taking another person’s life. With no permit required, compared with real firearms, the ease and peace-of-mind of owning a Byrna launcher is the perfect middle ground.
So, we have a small-cap stock poised to grow 50%+, organically the next two years, with strong potential for 400% earnings growth as well.
There are only 22M shares outstanding.
2M shares are sold short.
And, BYRN is barely owned by institutions.
Compare that to the 1,600+ funds long AXON:
There are less than 100 funds long BYRN. Anyone else think a stock split is forthcoming?
Hmmm, this reminds us a lot of POWL, ROOT and SEZL before they doubled for us earlier this year.
Amazing Top Line and Bottom Line growth rates, super-tight share structures, huge TAMs, no need to raise cash… all these components are Holy Grail ingredients for our Top Tier Inflection process.
To make the brew even more potent, we love this huge basing pattern in the shares. It’s easy to see how we push into the $20s by year-end, and then head to the mid-$20s BEFORE the Compact Launcher gets released.
At some point Byrna may run into scaling its revenues with its existing marketing approach. For now, this is not a major worry as we get the sense the company's ROI continues to be super-strong in the current quarter.
There is also the risk that Byrna’s retail expansion may not work, along with its new ad engines it is running via Billboards and smaller Radio/Cable Networks.
And, of course, there is the risk Byrna’s new compact launcher may not be a hit product. But, we like our odds there.
Another risk is a Smith & Wesson or Sig Sauer elects to move into Byrna’s space, but we believe such a strategy would go against everything their brands stand for.
With BYRN trading for less than 2.5x our Forward Revenue estimates two years out and its Price-to-Sales multiple poised to expand to 6x forward numbers, we see minimal downside at current levels.
A move to the $40-$45 level seems like a very reasonable set of expectations for late next year if our thesis plays out. We think it does. We have a 10-Conviction Level on BYRN.
Stop Loss: Given our conviction level and a Risk/Reward of $20-$25 upside potential vs $3 of downside over the next twelve months, we plan to use a Time Stop on BYRN.
Special situations call for patience. BYRN is one such special situation.
Looking out 3-4 years, we think BYRN has strong potential to be a 5-Bagger and become a $2.5B market cap company. By then, it would not surprise us to see Byrna doing $400M in Revenues and on its way to becoming the next TASER. (For us, AXON will always be TASER).
Of course markets are unpredictable, so plan accordingly in sizing into the name. BYRN shares can also be fidgety day-to-day, as liquidity is minimal. This is a factor that would work against us if our thesis does not play out, but will work splendidly if and when BYRN becomes institutionalized in the coming quarters.
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Disclosure: We are long BYRN stock and calls. We may change our positioning at a moment’s notice, without notifying you of any such moves.
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