Taser International said it received a contract from a U.S. federal law enforcement agency for its stun guns and related accessories, sending its shares up 7 percent. The contract with the U.S. Customs and Border Protection (CBP) for its X26 electronic control devices can potentially extend for a five-year period, the company said.

Taser, however, did not disclose either the financial terms of the contract or the number of units to be shipped.

We believe this relationship could potentially be significant for Taser, analyst Eric Wold of Merriman Curhan Ford & Co said.

Tasers, also known as conductive energy weapons, disable people with a 50,000-volt jolt of electricity, and have become increasingly popular with police around the world.

The X26 transmits electrical pulses through wires and into the body affecting the sensory and motor functions of the peripheral nervous system.

The contract was placed with Aardvark Tactical Inc, which is Taser's distributor for the U.S. government.

Shipments will begin in the current quarter, the company said.

Combined with today's announcement from the U.S. CBP and the potential for a sizable order already shipped during the third quarter... we continue to believe Taser is on-track to report upside third-quarter results, said Wold.

The analyst, who has a buy rating on the stock, said there is more likelihood for upside revisions to estimates from the Obama stimulus plan, which could propel Taser shares higher.

Shares of the Scottsdale, Arizona-based company were up 2 percent at $4.68 in Tuesday afternoon trade on Nasdaq. They earlier touched a high of $4.90. (Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Anne Pallivathuckal)

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