Ammunition maker Vista Outdoor (VSTO 2.56%) should benefit from the Georgia Senate runoff elections as the results should bolster demand for firearms, Riley Securities analyst Eric Wold says.

On Wednesday, Wold reiterated his buy recommendation of the owner of the leading Federal Premium brand of ammo as well as the recently acquired Remington brand, and set a price target of $33 per share, some 32% above yesterday's closing price for Vista of $24.92 per share.

Dollar sign on ammunition

Image source: Getty Images.

Stockpiling ammunition

Wold told investors in a research note written before the Senate election results were final to expect volatility in Vista Outdoor's stock price regardless of the outcome, but said demand for firearms typically surges in the early part of Democratic administrations.

That was certainly the case during former President Barack Obama's tenure as fear of strict gun control legislation kept sales at elevated levels, though sales last year hit all-time record highs.

According to the National Shooting Sports Foundation, adjusted FBI data for criminal background checks on potential gun buyers hit 21.1 million, some 60% more than were conducted in 2019 and 34% higher than the previous record hit in 2016.

In November, Vista Outdoor said year-to-date shooting sports sales jumped 26% year over year leading to operating profits quadrupling. CEO Chris Metz attributed the sales increases mostly to participation in recreational shooting sports fueled in part by concerns for safety and personal protection.

Demand is so high Vista's president of ammunition made a YouTube video pleading for consumer understanding that the company was working overtime to produce as much ammo as it could. That's not likely to abate now that the Democrats appear to have won the two Georgia senate seats, stoking concerns that stricter gun ownership legislation will be coming.