What happened

On its first day of trading as a once-again separate company, the guns business of Smith & Wesson Brands (SWBI 0.19%) saw its shares leap more than 20% in early trading Tuesday. They later settled down to the 5.5% gain seen at 11:45 a.m. EDT.

Helping to boost the shares today is a new analyst report out of Cowen & Co.

A cartoon of people at the start line of a footrace

Image source: Getty Images.

So what

In today's report, summarized by StreetInsider.com, Cowen reinitiates coverage of Smith & Wesson stock, calling it "a firearms pure play with robust FY21 prospects from surging gun demand." Cowen is a fan of this business, rating the stock "outperform" (i.e., buy) with a $24 price target.

The banker says it would be especially bullish on the stock's prospects in the event that former Vice President Biden continues to lead President Trump in election polls.

Now what

So much for why the stock gained so much early this morning. Now why is it giving up so much of those gains as we approach afternoon?

Here, a note of caution: "Our above-consensus FY21" earnings prediction, says Cowen, may represent "a cyclical peak" in how much Smith & Wesson can earn, such that future earnings may weaken. The analyst argues that the stock's current valuation is cheap enough to offset this risk. But with Smith & Wesson shares having nearly tripled over the past year, it seems some investors are content to take their winnings and leave the table today.