Smith & Wesson saw its stock jump 11 percent Tuesday after the gun manufacturer raised its sales forecast, but it settled down a day later.
The company's announcement and the stock increase came on the same day that the Obama administration announced new executive orders meant to expand background checks and improve gun-control enforcement measures, according to financial site Motley Fool
According to Bloomberg Business, Smith & Wesson
rose to $25.86 at the close in New York Tuesday — the highest value ever for the company that started trading in February 1999.
"The company indicated that the sell-through rate of its products at distribution has been stronger than originally anticipated, resulting in reduced distributor inventories of its firearms," Smith & Wesson said in a press release Tuesday
on its updated financial expectations.
"The company added that Adjusted National Instant Criminal Background Check System data for the month of December, which serves as an indicator of consumer purchases, reflected strong growth versus December 2014," the statement continued.
According to Motley Fool, Smith & Wesson expects to generate revenue of $180 million for its third fiscal quarter ending Jan. 30, as compared to the $155 million the company originally projected.
Chris Krueger, an analyst with Lake Street Capital Markets LLC, told Bloomberg Business that the last big boost in gun sales came after the Sandy Hook Elementary School shooting in Newtown, Connecticut, in which 20 children and six adults were murdered in December 2012.
Krueger added that Dec. 2 terrorist attack in San Bernardino, California — in which two shooters opened fire during a holiday party — is also playing a role, according to Bloomberg. In that attack, husband-and-wife duo Syed Farook and Tashfeen Malik fatally shot 14 people and injured 22 others before being killed hours later in a police shootout.
"Three years ago after Newtown, it was primarily the gun-control factor," Krueger said to Bloomberg Business. "This time it's a combination of personal protection and gun control."
Barron's reported Wednesday, though, that Smith & Wesson
shares have already dipped 4.2 percent to $24.77 after the 11-percent increase Tuesday. Accordingly, Wedbush analysts James Hardiman and Sean Wagner moved Smith & Wesson's stock from "Outperform" to "Neutral."
"For us to promote the types of multiples necessary to advocate dramatic upside from here, we would need to believe in a more structural change in the industry, rather than a temporary news-driven boost," the analysts said, according to Barron's.
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