While firearms makers like Smith & Wesson (NASDAQ:SWBI) have long faced their share of controversy, today was an excellent day for the stock. Shares blasted up nearly 28% in Friday afternoon’s trading after a fantastic new report came out from analysts in conjunction with its recent earnings report.
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Craig-Hallum upgraded the stock from Hold to Buy while boosting the price target from $14 to $18. While some might think an election cycle is a terrible time for a firearms manufacturer, others believe that this is the time to get in before someone decides to change some law that makes anything more technologically advanced than a flintlock illegal.
Craig-Hallum pointed out that Smith & Wesson is keeping its inventory “lean” while seeing rising demand and improving its leverage. Throw in a pretty nice third-quarter earnings report, and all is about as good as it gets.
Quality Material, Quality Stock
Smith & Wesson clearly has a lot going for it, as demonstrated by Craig-Hallum’s report. But it also has excellent material. A recent review of the M&P9 M2.0 handgun revealed a quality product executed well, which should no doubt draw the interest of handgun enthusiasts. Meanwhile, although its profit margin was down somewhat in the third quarter, a rise in sales helped to offset any trouble.
Is Smith & Wesson Stock a Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SWBI stock based on one Buy and one Hold assigned in the past three months, as indicated by the graphic below. After a 71.13% rally in its share price over the past year, the average SWBI price target of $14.25 per share implies 17.49% downside risk.
