B Riley analysts question election-driven firearm/ammo recovery thesis

Investing.com - On Thursday, financial analysts at B Riley expressed skepticism towards the thesis that the upcoming presidential election will stimulate a recovery in firearm and ammunition demand.

They believe this outlook is overly optimistic, primarily because the most potent catalyst for increased firearm/ammo demand is a transition from a Republican to a Democratic presidency, which stimulates stockpiling behavior due to perceived risks of Second Amendment reform.

Given President Biden's current tenure, the most probable outcomes of the election are either maintaining the status quo or a return of Mr. Trump to office. The analysts remind investors of the "Trump Slump" during his first term, which saw a decline in demand following robust sales under Mr. Obama's presidency.

The team at B Riley also highlighted a decline in event-driven purchasing behavior since the onset of COVID-19. They attribute this to several factors, including the high level of stockpiling early in the pandemic, diminished concern over restrictive federal legislation, and general consumer pressure.

They also pointed out that gun reform is increasingly occurring at the state level, reducing the influence of presidential elections as demand catalysts. They cited California's upcoming implementation of an 11% excise tax on guns and ammo in July 2024 as an example.

Analysts have set a price target of $70 for Academy Sports Outdoors Inc (NASDAQ:ASO) and a price target of $4.00 for Sportsmans Warehouse Holdings (NASDAQ:SPWH).