Axon (NASDAQ:AAXN) stock popped to all time highs in early November after the law enforcement technology solutions provider reported blowout third quarter numbers which breezed past expectations and included a healthy fourth quarter guide.

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Specifically, Axon’s revenues came in 10% above expectations — rising nearly 30% year-over-year — while earnings per share doubled consensus estimates. Management also guided above expectations for Q4 revenues and profits. In response, AAXN stock surged more than 10% higher.

Zooming out, Axon’s blowout earnings report fits in perfectly with what is an increasingly favorable long-term bull thesis on the police tech company.

That is, it is becoming increasingly obvious that Joe Biden will likely win the 2020 U.S. Presidential Election, meaning that over the next four years, law enforcement agencies across the country are going to be given more funding to spend on new technologies which increase police safety and transparency. Axon is the best-in-breed provider of police tech solutions, without much competition.

In other words, the law enforcement sector is finally going to leapfrog into the modern digital era, and Axon will pioneer this enormous digital makeover.

That’s a winning recipe which ultimately implies that AAXN stock is positioned to have a great four-year run.

Here’s a deeper look.

The Perfect Environment for Axon

A common misconception about Joe Biden’s platform is that his policies support defunding the police.

They don’t. Rather, Biden’s stance here is very clear. It is to increase police funding, so that they can have the necessary resources required to fund reform efforts.

In other words, a Biden administration would give law enforcement agencies more money, and require that they spend that money on new technologies which increase transparency and community safety. Things like body cameras, smart weapons, dash cameras, record management systems and modernized dispatch technologies.

You know who makes all that stuff? Axon — and as I’ve said time and time again, the company basically has no competition when it comes to law enforcement tech.

Axon is the top dog. For all intents and purposes, the only dog.

So, if Biden does end up winning the election (betting markets currently have his odds at 95%), Axon will have clear visibility to selling a ton of product to law enforcement agencies over the next four years. That increased visibility will, of course, provide a big boost to AAXN stock.

Axon Stock to $150?

By my numbers, AAXN stock should be able to take out the $150 level within the next 12 months.

The math here is pretty straightforward.

Police spending budgets have increased at a ~4% annual cadence for the past several years. Under a Biden administration, that could go up maybe to 5% to 6% annualized growth. Axon’s share of police spending will dramatically increase over time, as law enforcement agencies increasingly modernize and leap-frog into the digital era.

Assuming so, Axon’s revenues should rise at a 10% to 15% annualized pace for the foreseeable future.

At the same time, Axon is building out a software and services business that complements its core hardware offerings. This software business is much higher margin than the hardware business. So, as the software business scales over the next few years, it will provide a meaningful to lift to margins, which could turn 10% to 15% revenue growth into 20% to 25% profit growth.

Under those assumptions, I think Axon can do about $8.50 in earnings per share by 2030. Based on a 35X forward earnings multiple and an 8.5% annual discount rate, that implies a 2021 price target for Axon stock of over $150.

I think that’s exactly where the stock will end up in 12 months if Biden does hold on and win this election.

Bottom Line on AAXN Stock

Axon stock is a long-term winning play on the digitization and modernization of law enforcement. To that end, the stock is a great long-term buy no matter who wins the Election.

But, if Biden does win as looks likely today, that will provide increased firepower for AAXN stock over the next few months. Behind that increased firepower, this stock could easily take out $150 by this time next year.