Nucor earnings beat by $0.08, revenue fell short of estimates
On Monday, Lake Street Capital Markets upgraded Smith & Wesson Brands Inc. (NASDAQ:SWBI) stock rating from Hold to Buy, maintaining a price target of $13.00. The firm's decision to upgrade is based on a combination of favorable valuation and an improved outlook for both the industry and Smith & Wesson specifically.
The analysts at Lake Street have kept their financial estimates unchanged and believe that the current stock price presents a significant opportunity for upside price appreciation. This optimistic stance is supported by the potential they see in Smith & Wesson's position within the industry.
In their recent statement, the analysts expressed confidence in the company’s future performance by stating, "Upgrading To Buy And Maintaining Our $13 PT. We are upgrading to Buy based on valuation and an improved outlook for the industry and Smith & Wesson." The firm's analysis suggests that the stock is currently undervalued, which could lead to profitable opportunities for investors.
Lake Street Capital Markets has applied a 7.5x multiple to their fiscal year 2026 adjusted EBITDA estimate of $82.2 million to arrive at the $13 price target. This methodology underscores the firm's belief in the company's earnings potential and its ability to outperform within the market.
The upgrade by Lake Street Capital Markets reflects a positive change in the assessment of Smith & Wesson's stock, indicating a belief in the company's value and prospects for growth. The maintained price target of $13.00 suggests that the firm sees stability in the company's financial outlook and potential for investor returns.
In other recent news, Smith & Wesson Brands, Inc. announced the upcoming retirement of Sue Cupero, the company's Vice President of Sales, set for May 2025. The company has begun the process of finding her successor. Additionally, Smith & Wesson reported Q2 earnings of $0.11 per share, falling short of the $0.17 consensus estimate, and revenue of $129.7 million, slightly below the projected $132.42 million. Despite missing estimates, the company saw a 3.8% YoY increase in revenue.
The company attributes the weaker-than-expected results to normalizing demand and inflationary pressures. Smith & Wesson anticipates third-quarter revenue to be approximately 10-15% lower than the same period last fiscal year. However, the company reported an increase in market share, with new products accounting for 44% of the quarter's sales.
In response to these developments, Smith & Wesson's board authorized a new $50 million share repurchase program and maintained its quarterly dividend of $0.13 per share. The company also secured a new $175 million unsecured credit line, increasing its total available borrowings by $75 million. Following these announcements, Lake Street Capital Markets and Craig-Hallum downgraded the company's stock.
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