“Shares of firearms maker Smith & Wesson Holding Corp. hit a new 52-week high Monday after a Wedbushanalyst said that gun sales are rising on worries that President Barack Obama may tighten gun laws if he is reelected.” I don’t think that means what they think it means. At best, the Prez could tighten federal regulations via his (but not our) good friends at the ATF. Anyway, finance.yahoo.com identifies “THE SPARK: Wedbush analyst Rommel Dionisio reiterated his ‘Outperform’ rating on the stock and raised its price target to $10 from $7.” And now . . . THE BIG PICTURE . . .
Smith & Wesson’s rivals are also seeing higher demand for guns. On March 21, Sturm, Ruger & Co. Inc. said that it has received orders for more than one million units, forcing it to stop accepting new orders until it can catch up. Smith & Wesson might be able to gain more market share from Sturm, Ruger & Co. while it halts new orders, Dionisio said.
Huh? Smith & Wesson’s handgun production is also maxed-out. More to the point (money and the making thereof), Smith can’t sell its Perimeter Security Solutions business for love or money. It continues to be an enormous drag on profits.
A fact that somehow doesn’t get much attention in Smith & Wesson’s March investor presentation. (Click here for the pdf.) If Smith ever manages to unload that turkey, look out world!
THE ANALYSIS: Besides higher sales, Dionisio said Smith & Wesson’s new handgun could help boost its stock.
Like S&W needs another skew. Anyway, we’ll be at NRA for the launch. And lunch. On our nickel methinks.