What Is The 'Shot Show,' And What Does It Mean For Smith & Wesson?

Wunderlich’s Rommel Dionisio believes the upcoming Shot Show — the firearms industry’s most important annual trade show, scheduled for mid-January — is likely to intensify the competition for Smith & Wesson Holding Corp SWHC, challenging the company’s market share.

Dionisio maintains a Hold rating on the company, with a price target of $26.

Increasing Competition

In anticipation of the Shot Show, many of Smith & Wesson’s prominent competitors have already started to unveil new products for 2017.

The new product introductions in two of the fastest growing categories in the firearms segment, modern sporting rifles (MSRs) and compact/concealed carry handguns, could challenge the company’s market share, which had been increasing meaningfully over the past several years.

The analyst said Wunderlich’s firearms distributor contacts believed Smith & Wesson would also soon unveil the second generation of its popular M&P pistol.

Slowing Sales

However, the analyst also expects industry sales to slow, following the “unusually high growth” in 2016.

“Thus, not only does the industry face difficult y/y comparisons, beginning in Dec., but also may have seen pull forward of consumer demand from 2017 into 2016. In addition, our recent channel check feedback indicates certain retailers and distributors had elevated order levels prior to the election, predicting a Democratic victory and tightened gun control legislation,” Dionisio stated.