An optimistic comment from an analyst at Cowen investment bank led to an increase in the stock price of retailer Vista Outdoor Inc (VSTO) last month. As a manufacturer and supplier of ammo and outdoor products, the increasing market for guns can also be a catalyst for Vista Outdoor.
The current period of demand growth for Vista Outdoor goods, due to forced self-isolation, increased hunting popularity and demand for guns due to mass protests in the United States, was noted by Cowen analyst Gautam Khanna. In comparison, traditionally, the advent of the president of the U.S. Democratic Party has led to a rise in concerns of firearms bans, and Americans are starting to purchase guns for the future.
The analyst also assumes that the issues with the debt and valuation of the Remington, Bushnell and Camelbak products have been addressed by Vista Outdoor. The business saw good growth in the categories of shooting sports, as well as expanded online revenues. As a consequence, in the quarter, revenue rose 29 percent and profits were $1.1 per share.
Cowen issued an “Outperform” recommendation against this backdrop and raised the target price from $29 to $33.
At the same time, stricter control of civilian weapons remains the company’s long-term risk. Judicial restrictions may be circumvented by limits on the selling of ammunition (the freedom to buy a pistol is enshrined in the US Constitution). Nevertheless, a full moratorium on the selling of cartridges for commercial guns is impossible to wait for the next two years.
Vista Outdoor Inc. (VSTO) was up +1.81% on Monday to conclude the year’s first session at $24.19. Over the past 5 sessions, the stock is though down at -6 percent but the stock’s monthly performance has been touching the 20 percent mark. Market capitalization of the company currently stands at $1.42 billion.