Shares of Smith & Wesson Holding Corp. climbed Thursday, breaking free of a downturn in the broader market after the U.S. Supreme Court overturned a handgun ban in Washington DC.
By a 5-4 decision, the Court ruled that the district's handgun laws violated the Second Amendment to the Constitution by denying individuals the right to own guns.
Smith & Wesson shares rallied in heavy trading, rising 44 cents, or 8.6 percent, to $5.55. Analysts said the ruling will have little effect on Smith & Wesson's sales, however. Cowen & Co. analyst Cai von Rumohr said the Washington DC restrictions were far tighter than most others in the country, and DC is a small market.
"(More than 90) percent of the country, except for Illinois, Wisconsin and DC, already permit gun owners to carry concealed weapons," he said, adding that 37 states don't require a concealed carry permit, or have laws requiring that guns be issued to customers who meet the requirements for getting a permit.
"This is a nice symbolic victory that has relatively little significance to their business," von Rumohr added.
A Smith & Wesson spokesperson declined to comment on the ruling.
Wedbush Morgan Securities analyst Rommel Dionisio said it is hard to get a read on the effects of the ruling and what it might mean for other cities that restrict gun ownership. He said it is possible that some municipalities may change their laws.
Von Rumohr and Merriman Curhan Ford analyst Eric Wold said gun sales often pick up when prospective buyers expect more restrictive control laws to be passed. Wold said that is what happened after the Federal Assault Weapons Ban was passed in 1994.
Von Rumohr said he thinks gun sales would also increase if Sen. Barack Obama is elected president, as customers might expect more stringent gun control laws to follow.
In afternoon trading, shares of Sturm Ruger & Co. dipped 4 cents to $7.28.
Ammunition maker Olin Corp. lost $1.18, or 4.4 percent, to $25.48. As oil prices set all-time records and downgrades pressured financial stocks, the Dow Jones industrial average fell nearly 300 points and other major indexes suffered comparable declines.
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