Ahead of the Bell: Smith & Wesson gains

Associated Press

NEW YORK (AP) — After Smith & Wesson Holding Corp. posted bright fiscal first-quarter results and an upbeat outlook, the gun maker's stock soared 22 percent before the market open on Friday.

Smith & Wesson has benefited this year as demand for guns grows in the U.S. Analysts say the increase stems from fears of potential new gun control bills if President Barack Obama is re-elected in November.

The Springfield, Mass., company on Thursday reported net income from continuing operations of 28 cents per share on revenue of $136 million for the quarter that ended on July 31. Analysts polled by FactSet predicted earnings of 18 cents per share on revenue of $128.7 million.

Smith & Wesson expects earnings during the fiscal year ending in April of 85 to 90 cents per share with revenue of $530 million to $540 million, or nearly one-third higher than the previous year. That would demolish analysts' forecasts of 57 cents per share on revenue of about $498 million.

For the current quarter, which ends in October, Smith & Wesson anticipates earnings of 19 to 21 cents per share on revenue of $130 million to $135 million. Wall Street foresees earnings of 10 cents per share on $119 million in revenue.

Higher volumes and cost cuts are driving profit, said Scott Hamann of KeyBanc Capital Markets in a client note. He kept a "Hold" rating.

Wedbush's Rommel Dionisio said that strong demand for guns seems to be continuing into the company's current quarter, with industry sales up 28 percent in August.

The analyst maintained an "Outperform" rating and increased Smith & Wesson's price target to by $1 to $11.

Shares of Smith & Wesson jumped $2 to $11 in premarket trading. The stock has more than doubled this year.

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