Survey: Gun Owners Not Convinced They Own Enough Guns, Triggering An Upgrade For American Outdoor Brands

Analysts at Wedbush turned bullish on American Outdoor Brands Corp (NASDAQ: AOBC) after conducting a proprietary consumer survey and checks with distributors. The firm's James Hardiman upgrades American Outdoor's stock rating from Neutral to Outperform with a price target boosted from $16 to $19.

A survey of more than 200 gun owners reached an encouraging conclusion as those surveyed indicated they are "far from satisfied" with their existing gun purchases, Hardiman commented in his upgrade note. In fact, gun owners anticipate an "even higher level" of gun purchases over the next year compared to the last year.

"While our upgrade may ultimately be seen as "early" given how much work is left to be done in the channel, there are a number of unpredictable catalysts that could accelerate this recovery, and we believe that AOBC's valuation is approaching the low-end of its likely range," Hardiman wrote.

Meanwhile, the Republican-dominated government and Trump presidency "poses no threat" to the gun industry as opposed to prior months when gun owners bought guns out of urgency, the analyst continued (see his track record here). Naturally, this created a slowdown in gun sales, but now avid gun owners are expected to return to the market, which will create "support levels for industry-wide firearm purchases and gun stocks."

As such, the gun industry as a whole will most likely see solid growth, especially for American Outdoor as the gun manufacturer continues to increase its share in the growing handgun segment. Specifically, Smith and Wesson was named as one of the top two brands in terms of purchase intentions in the survey.

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