Vista Outdoor (VSTO) PT Raised to $29 at Cowen on Ammunition Demand

November 9, 2020 7:37 AM EST
Get Alerts VSTO Hot Sheet
Price: $41.22 -2.65%

Rating Summary:
    14 Buy, 3 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 8 | Down: 8 | New: 9
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Cowen analyst Gautam Khanna raised the price target on Vista Outdoor (NYSE: VSTO) to $29.00 (from $27.00) on the belief that the civil ammo demand surge will persist for longer than investors fear for several reasons:

1) Biden's win may sustain fear of restrictive firearm regulation (forcontext, ammo demand surges lasted for 6 months following Obama's elections)

2) cultural "Armageddon" mentality given COVID-19/civil unrest

3) a rise in new shooters

4) ammo supply shortages, which tend to stimulate demand

The analyst reiterated an Outperform rating, stating "VSTO's 9/30 ammo backlog= $1B (ex Remington), about a full year of organic demand, but admittedly, the backlog may include speculative orders (i.e. "double" orders made to VSTO & competitors) that may disappear if supply catches up. Mgmt asserts that it will take many months to ramp Remington's capacity (and VSTO has been at 24/7 ammo production since March), so a supply surge is unlikely for >2 Qs".

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