Smith & Wesson's Q3 Likely To Be Hindered By 2016's Terror-Inspired Demand Spikes

After market close on Thursday, Smith & Wesson Holding Corp SWHC reported Q2 results, which beat on both top- and bottom-line estimates. The stock sank on lower-than-consensus Q3 guidance, however, with shares trading down around 8 percent in the pre-market Friday.

Wunderlich analyst Rommel Dionisio maintains a Hold rating on the stock with a price target of $26 leading into the anticipated Q3 downturn.

The conservative Q3 guidance stems mostly from decelerating momentum and a “sluggish” start to the hunting season, according to Dionisio.

December Weapons Downturn

The analyst sees an overall downturn in the firearm industry coming in December based on a number of factors:

• More difficult year-over-year comparisons in National Instant Criminal Background Check System (NICS) data beginning in December.
• Slow start to the hunting season due to warmer weather throughout the country.
• Significant retail stocking before the election when a Clinton win was assumed.

At the time of writing, shares of Smith & Wesson were trading down over 8 percent at $23.98.