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Gun seller American Outdoor’s stock plunge is ‘overdone’ but analyst still downgrades

The selloff in gun maker American Outdoor Brands Corp.’s stock has been “overdone,” said Wedbush analyst James Hardiman, but he still downgraded it to neutral from outperform, citing a lack of near-term catalysts. Hardiman also cut his stock price target to $11.00 from $13.50. The stock shed 0.6% toward a 7-month low in morning trade Wednesday, and has plunged 24% so far this month. The company reported last week fiscal third-quarter adjusted earnings and sales that beat expectations, but provided a downbeat fourth-quarter profit outlook. Hardiman said the selloff has been overdone, given the opportunity for the company to manufacture growth in 2020 without a major rebound in demand. “Investors are unlikely to get excited about the stock in the absence of such a rebound, however, while the near-term outlook, which includes the toughest [comparables] of the Trump era and a hazardous [fiscal year] 2020 guide, is more likely to further spook investors than bring them onboard,” Hardiman wrote in a note to clients. He said contacts at gun shops expect a sense of urgency for gun buyers to return in fiscal 2021 as the political environment heats up, but “such a far off catalyst” is not enough to recommend buying the stock today. The stock has tumbled 24.1% over the past 12 months while the S&P 500 has gained 0.8%.

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