Smith & Wesson (SWHC): Buy Weakness, Says Lake Street

Lake Street Capital Markets maintained a Buy rating on Smith & Wesson Holding (NASDAQ: SWHC) with a price target of $15. Yesterday it reported Q2 results, but lowered guidance. In the view of analyst Chris W. Krueger, investors should buy weakness.

"Smith & Wesson easily beat 2Q expectations, but guided down more heavily than expected for the remainder of the year. Distributors and retailers again reduced their inventory replenishment activity, which will likely continue into 2H2015. However, we believe SWHC’s inventories are in great shape, as the company managed to reduce its channel unit inventory by 18% during 2Q and 36% from its recent high point. This should lead to strong ordering activity as normal conditions return. However, the channel is still quite loaded with competitors’ inventory, which has led to promotional activity by the competition and that is temporarily slowing sales of Smith & Wesson products," said Krueger.

"In our opinion, the next uptick in ordering activity will occur in January/February when distributors and retailers typically take on new products during the industry’s show season. Although expectations for 2H2015 have been lowered, we believe the new levels should be very achievable. In our opinion, shares of SWHC were already largely pricing in a guidance reduction, and investors should take advantage of any additional weakness in the stock," he added.

For an analyst ratings summary and ratings history on Smith & Wesson Holding click here. For more ratings news on Smith & Wesson Holding click here.

Shares of Smith & Wesson Holding closed at $9.41 yesterday.

You May Also Be Interested In

• Mizuho Reiterates Outperform Rating on Broadcom Limited (AVGO) Into EPS
• Rockwell Automation (ROK) PT Lowered to $490 at DA Davidson
• Ferrovial SA (FER:SM) (FRRVF) Reiterated at Buy by UBS on Winning Bid For Tennessee Project