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Gun manufacturer Smith & Wesson Holding Corp. is poised to enter new markets such as those for shotguns and hunting rifles, an analyst said Tuesday as he raised his revenue and profit estimates for fiscal 2010.

The moves came a day after the Springfield, Mass., pistol maker said its fiscal 2009 fourth-quarter profit more than doubled on a 20 percent rise in revenue.

Analyst Eric Wold of Merriman Curhan Ford said Smith & Wesson can capitalize on its brand name that dates to the mid-19th century.

“We believe that after spending recent years improving manufacturing efficiencies, management will continue to utilize the strength of the 157-year-old Smith & Wesson brand name to enter into a number of categories that are logical extensions of its strengths in the handgun market, including the tactical rifle, shotgun and hunting rifle markets,” he said in a note to investors.

Wold increased his fiscal 2010 estimates to 41 cents per share on revenue of $412.5 million from 38 cents per share on revenue of $348.8 million. He said he is optimistic about demand among consumer and law enforcement customers for its products.

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Analysts surveyed by Thomson Reuters expect earnings for 2010 to be 39 cents per share on revenue of $388 million.

Wold also initiated a 2011 earnings estimate of 51 cents per share on revenue of $491.5 million.

Analysts expect earnings for 2011 to be 48 cents per share on revenue of $461.5 million, according to a survey by Thomson Reuters.

Wold said he believes improving handgun sales - “partly from recessionary fears as well as a concern over potential legislative actions to be taken by the Obama administration” - will drive rising demand into the new fiscal year.

Smith & Wesson said Monday it earned $7.4 million, or 14 cents per share, in its fiscal fourth quarter. That was more than double the $3.3 million, or 8 cents per share on fewer outstanding shares, in the same quarter in 2008. Revenue rose 20 percent to $99.5 million from $83.1 million. The fiscal fourth-quarter and year ended April 30.

Analysts polled by Thomson Reuters expected profit of 12 cents per share on revenue of $97.8 million.

For the full year, the company lost $64.2 million, or $1.37 per share, compared with a profit of $9.1 million, or 22 cents per share, in fiscal 2008. Revenue rose 13 percent to $335 million from $295.9 million.

Source: Forbes.com

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