Based on reduced consumer demand following the company's fiscal second-quarter results, Craig-Hallum has downgraded Smith & Wesson (SWBI, Financials) to a Hold rating from Buy.

From $18 to $13, the investment company lowered the price target of the gun manufacturer With their 52-week low of almost $10.43, this news dropped Smith & Wesson shares down almost 20%.

• Warning! GuruFocus has detected 2 Warning Sign with SWBI.

Founded in 1852 by Horace Smith and Daniel B. Wesson, Smith & Wesson is well-known for manufacturing rifles, pistols, and high-quality revolters. Renowned among the oldest and most well-known gun manufacturers in the United States, the Springfield, Massachusetts-based business has a rich legacy.

The most recent Smith & Wesson earnings report fell short of projections for profit and income on Wall Street. From $19.3 million last year, the company stated non-GAAP quarterly EBITDA of $18.5 million. Income fell short of projections as the gun business suffered.

Craig-Hallum analysts revised their fiscal 2025 projection and blamed declining consumer interest and gun sales for the downgrade, so impairing Smith & Wesson's financial situation. Following years of high buying patterns motivated by regulatory concerns in the early 2010s and epidemic demand in the early 2020s, the analysts also observed that the firearms market is stabilizing. The firearms business has been cyclical, with times of great demand interspersed with slower expansion.

Legal environments and customer attitudes have changed for Smith & Wesson. Although it still rules the market, the company has concentrated on personal security. Smith & Wesson has made investments in product innovation despite challenges in order to increase its range of offerings and clientele. Because of its dependability and adaptability, the M&P seriesa civilian and law enforcement classicis a mainstay.

Craig-Hallum pointed out that Smith & Wesson kept its personal protection market share and raised it over the quarter despite these obstacles. The investment firm showed hope for the company's future based on its constant product innovation and shareholder value dedication. Smith & Wesson keeps boosting shareholder value by means of dividends and share buybacks.