Sector Snap: Gun maker shares rise after sell-off
Shares of gun makers Ruger and Smith & Wesson rise after sharp drop since school shooting
NEW YORK (AP) -- After dropping sharply following last week's school shootings in Connecticut, shares of gun makers Sturm, Ruger & Co. Inc. and Smith & Wesson Holding Corp. climbed Wednesday on signs that firearm sales may be rising.
Twenty children and six adults were killed on Friday at a school in Newtown, Conn. Since then many politicians have said that they are ready to talk about stopping gun violence and will discuss stricter gun laws.
On Wednesday President Barack Obama vowed to send Congress new policy proposals by January for reducing gun violence.
Cowen & Co. analyst Cai von Rumohr said in a note to clients that his research suggests that gun sales have picked up since the school shootings on fears of stricter gun laws. Despite his research showing higher sales, Von Rumohr downgraded shares of Smith & Weston to "Neutral" from "Outperform" saying it's hard to tell whether gun laws will be changed.
Gun sales were brisk earlier this year on worries that gun laws could be stricter if Obama were re-elected. The same thing happened after he was first elected.
Demand was so strong that Ruger had to stop taking new gun orders last spring after receiving orders for over a million units.
After a Colorado theater shooting in July left a dozen people dead, background checks within the state increased. Background checks are needed to buy firearms, and analysts use the numbers to gauge gun demand.
In the days following the Connecticut shootings, shares of Ruger and Smith & Wesson fell on concerns about gun-control laws. They were also pushed down Tuesday after a private equity firm said it will sell its stake in another gun maker, and sporting goods retailer Dick's said it will stop selling modern sporting rifles nationwide.
Shares of Ruger rose $3.44, or 8.5 percent, to $44.04 in Wednesday afternoon trading. Shares are down 9.8 percent since Thursday, a day before the school shootings. The stock is up about 29 percent for the year.
Shares of Smith & Wesson rose 66 cents, or 8.5 percent, to $8.45. Shares are down 11.2 percent since Thursday, but are still up 94 percent since the beginning of the year.
