U.S. Markets close in 3 hrs 28 mins

Smith & Wesson shares fall on outlook for year

SPRINGFIELD, Mass. (AP) -- Shares of gun maker Smith & Wesson fell Tuesday after the gun maker didn't boost its outlook for the year, despite a strong fall quarter, increasing worries about slowing demand in the coming months.

THE SPARK: Smith & Wesson Holding Corp. late on Monday projected net income and revenue for its latest quarter that topped a prior forecast, as well as Wall Street expectations. The quarter, its fiscal second, ran from August to October. The company will release full results on Dec. 6.

But the company kept a previous outlook for the full year, which ends in April.

THE BIG PICTURE: President Barack Obama's administration has been good for the gun industry. Industry watchers have speculated that gun shoppers increased purchases out of fear that Obama's presidency would lead to tougher gun restrictions. But Washington has expressed little interest in passing new gun laws.

Smith & Wesson said the August-October quarter's sales were driven by strong demand for M&P branded products such as pistols, modern sporting rifles, and its new Shield line of weapons.

THE ANALYSIS: The fast-growing gun industry, driven in part by election-related purchases, may be approaching a peak in demand, said KeyBanc Capital Markets analyst Scott Hamann in a research note Tuesday.

That the company did not raise its guidance for the year may be evidence that supports his concerns about gun demand weakening in the coming months, he said.

Hamann has a "Hold" rating on the shares.

THE SHARES: Smith & Wesson shares fell 38 cents, or 3.8 percent, to $9.67 in late afternoon trading. Shares of the Springfield, Mass., company have more than doubled in 2012 and more than tripled over the past 12 months.