KeyBanc Capital Says Firearm Market Running Out Of Steam

Fox News reports

A report from KeyBanc Capital Markets cautioned that the firearms industry may be running out of steam, sending shares of Sturm, Ruger & Co. (RGR) and Smith & Wesson (SWHC) tumbling.

Smith & Wesson, which was downgraded to underweight from hold, traded 8% lower to $11.22 Thursday. Ruger was down 3.4% at $53.15.

KeyBanc also lowered its price target for Springfield, Mass.-based Smith & Wesson to $10 as a result of recent outperformance. The stock was up 45.4% so far this year, easily outpacing the broader market.

What is the general feeling among those of you who work in gun stores?

Steve Johnson

Founder and Dictator-In-Chief of TFB. A passionate gun owner, a shooting enthusiast and totally tacti-uncool. Favorite first date location: any gun range. Steve can be contacted here.


  • The market will stay hot as long as Obama is still trying to take all of our guns.

    • Dave

      Then Hillary thru 2020 unfortunately…

  • Steven T

    Everyone who wanted an EBR bought one during the panic.

    • Daniel

      Not true. I want one but wasn’t willing to pay panic prices so I’m waiting until they come back down.

    • Cymond

      An EBR? As in “one”?

      Given the number of variants, any EBR aficionado can easily want a half-dozen. I’d love to have at least 2 dedicated 22LR rifles, a pistol variant, a SBR, a 9mm SBR (DDLES), and a few different carbines.

      It’s called “Black Rifle Disease” and it is very contagious.

      for example, here’s a 3.25 pound 22LR AR-15 variant.

      • Rob in Katy

        I just picked up a S&W 15-22 and some 22lr a few weeks ago from a buddy that shoots match. I would like to get the wife shooting the 15-22 to get more practice. We took the SBR and M4200 out a few weeks ago and she helped sight it in with the eotech ( still on downtime from a rotator cuff repair on the good arm). She did really well, I think she would love the 15-22 and suppressor… maybe even get the little girl shooting. I saw a pink stock for the 10-22 last week 🙂

  • rb1990

    The buying craze has definitely stopped. I don’t know where all the ammo has gone, because customers aren’t asking for it, or buying, near as much as they were. Maybe it’s because they know we don’t have much. Our usual busy 4473 counter has dropped to maybe 4 or 5 a day, if we get to that much. I honestly don’t even remember the last time I sold an AR in the store. Prices are still higher than people want, and it’s deterring us from getting the pre-freakout business we had before December. Like they say, everything that goes up must come down, and the higher it is, the harder it tends to fall. The store I work at is in the central part of NC.

    • fennis

      I agree the buying craze has stopped. Our shop has been dead slow. Firearms are not moving. Ammo especially 22 long rifle and 9mm luger are still hard to come by.
      People are still hoarding ammo however.

      • Kyle

        People don’t want a gun without ammo to put into it, I’d suppose.

        • Budro

          At a certain point every one eventually has enough guns. Half of mine are safe queens so why buy more?

          • Never Again!

            Have you bought enough guns for your children?

            And their children?

            People need to stop thinking no further than the next election (if they’re even thinking that far ahead) and start thinking about the long-term.

  • MattW

    The market for firearms can be quite a different beast than a market for firearm company stock. Firearms will continue to stay a hot commodity over the next few years, but probably not to the level that we saw over the past 10+ months. KeyBanc is basically saying the firearm companies outperformed in the stock market above and beyond their actual financial performance because it was inflated just like firearms sales were due to the “scare”. I think the stocks will come down a little and level out to be more in line with actual financial performance as the people who bought to make a quick buck off the last scare bail out.

  • dcoleman

    In terms of actual gun purchases they are probably correct. With the continued scarcity, and subsequent high cost of ammunition, I think a lot of people have cut back on their firearm purchases. Once the ammunition side of things stabilizes I think the buying will pick up again. Like all bubbles though people run out of money at some point. We saw a similar problem the first time Obama was elected. Ironically he’s been the best thing to happen to the gun market in a long time. I’m certain he’d be mortified by that.

    • Formynder

      The last downraiting I saw esentially said that they were at max production, no matter how high demand goes they couldn’t perform any better than they already were. That was in the dip right after the peak of the recent gun control movement.

  • Joseph B Campbell

    The market will continue in a cyclic nature. Obama, the United Nations, certain speculators and even the Media will try to influence the market. Each with there own agenda and financial outcome.

  • Mystick

    They failed to mention that the DJIA took a 200-point nosedive on Thursday as well, so the devaluation is hardly solely endemic to firearms manufacturers’ stocks… everything is taking a hit.

    It’s what happens when the currency you use as your index is chronically overvalued.

  • I would not pay a great deal of attention to what KeyBanc has to say. The industry as a whole is working on back-orders that are close to a year long. This means they can sell everything they produce at a price that provides an excellent contribution margin. Assuming the management is doing a good job controlling costs, you will see better returns than historical rates. Looking into the midterm, the story changes.
    If the 2014 election proves to be disastrous for the Republican Party, a shift in the House will bring about Draconian gun control legislation. If in 2016, the White House remains Democrat, for all intensive purposes you can kiss the domestic firearms industry goodbye. Is this likely event? The answer is yes.
    During the 2012 elections, rather than rallying around a centrist GOP, the luminaries of the Tea Party decided to get even with a centrist GOP by not voting. So, what did they get in return? Democrats! This was the equivalent to amputating your head because you have a headache, and proof that clarity of thought can only be preserved is you allow oxygen to get to your brain. Hard to do when one’s head is occupying the rectal cavity. Regrettably, it looks like Tea Party is more interested in proving a point and is doing nothing to bring unity to the GOP. This is a political reality and it could very well be a driver for KeyBanc’s opinion.
    I will say this much. Were I a publicly held leading firearms manufacturer, I would take advantage of historically low interest rates to add plant and equipment to get into the airsoft market and compete in the global market…

    • RocketScientist

      Just as an FYI: the phrase is ” all INTENTS AND purposes” not “all INTENSIVE purposes”. This is one of the mondegreens I just can’t stand. I know the only thing worse than a grammar nazi is an internet grammar nazi, but I had to say something.

      • Mark

        Writing errors like that are a diamond dozen these days.

        • This is why God created editors. Rocket Scientist was quite right and Schuster must be turning over in his grave. I should know better mea culpa…

          • Max

            You killed three fish with one hook there!

    • Geoff a well known Skeptic

      Blame the TEA people because the Republicans failed to run either a minimally acceptable candidate or any sort of intelligent campaign. Calling registered Republicans 12 times a day until I was sick of the crap is NOT a good campaign. Trying to be “Obama Blanco” and not going on the offensive is NOT a good campaign. Mitt the Media Twit should have made every campaign commercial in either Detroit the devastated Democrat stronghold or the North Dakota Oilfields. Geoff Who notes he is not a highly paid election consultant whose dismal performance can be reversed by a billion dollars, well maybe next election.

    • tts

      “If the 2014 election…If in 2016…is this a likely event?”

      Nope. You’re just scaremongering which is something we’ve seen happen twice now with a D president and has caused and/or extended 2 gun and ammo buying crazes for no good reason. Driving up prices to insane levels on ammo and guns as well as making ammo at times particularly scarce. You’d have to be a fool to buy into this nonsense again, MUCH LESS 3 TIMES IN A ROW. Especially since the odds are in the R’s favor of getting control of both houses of Congress in 2014 (D’s have more seats up for election in regions that are favorable to the R’s), this is the R’s electoral session to lose.

      There has been nothing like a AWB 2.0 being seriously pushed by Obama and they (ie. Congress) weren’t even able to come to a consensus and vote on improving back round checks or limiting magazine capacities. Which are both things that even many gun owners wouldn’t mind and a majority of Americans have consistently polled as supporting. The politicians know that if nothing else that blanket gun bans much less anything like the AWB 2.0 are a political 3rd rail, nearly as bad as trying to go and cut Social Security. There is no wide spread support for such laws and they’ll just be primaried and lose their seat if they try.

      Also “centrist GOP”?! It always amazes me that people go and repeat this stuff much less believe it. Today’s GOP is so far right that Regan would’ve been kicked out of the party and primaried as a RINO.

    • Never Again!

      When the “unified” GOP is no better than the Democrats, what is the point of voting for them?

  • Patriot

    Not to worry, all it will take is another Demo-Rat running their mouth off.

  • Clint Notestine

    more of a reset perhaps back to levels before the 2012 or 2008 elections

  • Limonata

    It is still very hard to find many guns. We have seen Ruger expanding as well as Kel-tec and others. As more people become gun owners, more guns will be sold. There is still an ammo shortage which tells me people are both hoarding and shooting.
    Savage is running 3 shifts and now with ATK as the new owner will be upgrading and expanding.
    There was an article about Cabela’s in Fortune in July, they do not see it going down. They see people shifting to different kinds of guns but they still see a majority of their sales on guns.

    My local ranges are not exactly empty, in fact, they are packed

    The issue with the statement from KeyBanc is what is based on? What is the analysis that makes them come to that conclusion?
    I believe for many like myself, we are waiting for some of the crazy prices to come down. At the peak of the fear, even used S&W revolvers were selling above MSRP of the new revolver.
    I believe with any boom cycle, there is a point where is gets soft. People need to go on vacation and spend money for back to school and then the holidays. Thing could slow down, but soon as Hillary announces she is running for POTUS or there is another shooting, it will be hard on the gas pedal once again.
    Frankly, I am shocked at the amount of money people still have to purchase firearms and ammo at crazy prices.