Wunderlich recommends investors to remain on the sidelines on American Outdoor Brands Corp (NASDAQ: AOBC), formerly called Smith & Wesson, ahead of its third-quarter earnings on March 2.
Analyst Rommel Dionisio estimates third-quarter revenue of $236 million and GAAP EPS of $0.48, relatively in line with consensus estimates.
Dionisio is concerned about American Outdoor due to heightened competitive pressures, bloated inventory of modern sporting rifles (MSRs), challenging autumn weather impact on hunting season and retailer consolidations and bankruptcies.
“AOBC has historically delivered on or outperformed its own guidance, but given aforementioned challenging factors, we believe it less likely that American Outdoor Brands will deliver its usual beat & raise when it reports on Thursday,” Dionisio wrote in a note.
American Outdoor also faces difficult year-over-year comparisons amid slowing consumer demand for firearms, following strong 2016 and potential inventory destocking from liquidations of Sports Authority, Sports Chalet and MC Sports.
Ratings And Movement
As such, the analyst maintains his Hold rating and price target of $22.
Shares of American Outdoor closed Friday’s trading at $19.45.
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