After Smith & Wesson Brands' (NASDAQ:SWBI) fiscal second-quarter earnings shot Wall Street forecasts full of holes yesterday, one analyst now sees the potential for the gunmaker's stock to almost double in the coming months.

Lake Street analyst Mark Smith said that after Smith & Wesson posted "another quarter of record high-sales of firearms" after the market closed yesterday, he predicts the firearms giant's stock will be able to hit $28 per share, 85% above yesterday's closing price.

Man looking at a shotgun

Image source: Getty Images.

Two smoking barrels

Gun sales are through the roof this year. The FBI reports background checks on potential gun buyers rocketed 40% higher from last year to over 3.62 million investigations conducted. That was also nearly 10% higher than last month.

Smith & Wesson said firearms sales surged 119% in the quarter as long gun sales tripled and handgun sales doubled.

Smith says the gunmaker continues to steal market share from its rivals. And with dealers and retailers still suffering from having enough inventory on hand, coupled with production increases and price increases, Smith & Wesson should have an equally strong second half to its fiscal year.

The National Shooting Sports Foundation should soon be releasing its adjusted numbers of the raw FBI data. It takes the National Instant Criminal Background Check System figures the law enforcement agency publishes and eliminates duplicate checks, such as from those states that also check existing concealed carry permit holders to see if they're still eligible to have a permit. The adjustments give a more accurate picture of consumer demand for firearms.

Through October, the NSSF says the data shows demand is up 67% from last year and 2020 is already a record-breaking year.

Despite the analyst upgrade, though, shares of Smith & Wesson Brands are up less than 1% in midday trading. At just four times the free cash flow it produces, the market is valuing the gunmaker as a bargain basement stock.

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