Wunderlich Channel Checks Shows Significant Firearm Demand Following Orlando Shooting

While industry trends are accelerating, Smith & Wesson Holding Corp SWHC has a well-positioned product lineup, Wunderlich’s Rommel Dionisio said in a report. He maintained a Buy rating on the company, with a price target of $32.

Robust Sales Trends In July

The June FBI NICS background check data indicated a 21 percent increase in handguns and a 39 percent increase in long guns, following the Orlando shooting incident. Wunderlich’s channel checks showed that so far in July retail sales had grown in double-digits, with small frame handguns and tactical rifles continuing to be the hottest sellers.

Strong Retailer Orders

Distributors noted continued acceleration in their order backlogs, with retailers expecting strong consumer demand in upcoming weeks and months Apart from the Orlando and Dallas incidents, potential gun control legislation is also expected to boost demand, analyst Rommel Dionisio stated.

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Product Lineup

Smith & Wesson has a broad product offering and a leading market position both in tactical rifles and concealed carry handguns. Thus, the company appears poised to benefit from “the particularly high growth rates in these categories,” Dionisio mentioned.

Given the continued strong acceleration in industry demand and the low inventory levels, price promotions and discounts at retail “appear minimal,” which would likely boost Smith & Wesson’s near-term profit margin, the analyst added.

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