In a report published Thursday, Lake Street Capital analyst Chris W. Krueger upgraded the rating on Smith & Wesson Holding (NASDAQ: SWHC [FREE Stock Trend Analysis]) from Hold to Buy, and raised the price target from $12.00 to $17.00.
In the report, Lake Street Capital noted, “Although the stock has traded sideways since we initiated coverage two months ago, we believe SWHC’s visibility is improving. The firearms industry has faced tough comparisons recently, but seems to have weathered the storm so far, showing growth over the pre-sales-spike periods from two years ago. Now there are only a few more tough comparisons coming up and we believe SWHC is well positioned to meet or exceed expectations near-term. In our opinion, the stock is pricing in an earnings miss and/or guidance reduction when SWHC reports next week. However, given recent background check data and comments from retailers, we are growing confident that this will not happen, which should be a catalyst for the stock. Our price target is raised to $17 from $12 and reflects a P/E multiple of 12.5x, which is at the mid-point of projected earnings growth of 10-15%.”
Smith & Wesson Holding closed on Wednesday at $11.60.