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Sector Snap: Gun makers decline

NEW YORK (AP) -- Shares of gun makers and retailers declined in afternoon trading Thursday. An industry analyst said Thursday that he believes demand for guns may have peaked.

After a spate of mass shootings, including one at an elementary school in Newtown, Conn., in December, Americans flocked to buy guns and ammunition fearing further government restrictions.

But Scott Hamann, an analyst at KeyBanc Capital Markets, said he feels that the rush to buy firearms may start to ease soon. The analyst predicts retail demand will start to slow meaningfully in the fourth quarter and into the first quarter as worries about stricter government restrictions begin to wane.

Hamann lowered his rating on Smith & Wesson Holding Corp. to "Underweight" from "Hold," citing the company's exposure to the AR-15-style "modern sporting rifle" category — where he sees demand decelerating in particular — and the stock's recent outperformance. The analyst said in a client note that the company's stock is up about 45 percent for the year to date compared with a gain of about 19 percent by the Standard & Poor's 500 index.

Smith & Wesson's stock fell 84 cents, or 6.9 percent, to $11.34. The shares have traded between $7.40 and $13.38 over the last year.

Hamann kept an "Underweight" rating on Sturm, Ruger & Co. Its shares dropped $1.75, or 3.2 percent, to $53.26. The stock has traded in a 52-week range of $40 to $60.11.

Elsewhere in the sector, shares of Cabela's Inc. — a major sporting goods retailer that sells firearms — declined $1.94, or 2.8 percent, to $67.51. Over the past year, the stock has traded in a range of $38.44 to $72.54.