UPDATE: Wunderlich Securities Initiates Coverage On Smith & Wesson

Wunderlich Securities initiated coverage of Smith & Wesson Holding Corp SWHC in a report issued Friday with a Buy rating and $13 price target.

Analyst Rommel Dionisio believed "that with its rapid pace of new product innovation, particularly in the fast-growing small-frame handgun market, combined with its powerful brand equity, Smith & Wesson should continue to gain market share in the U.S. firearms category."

"Given the possibility of a turnaround in sales trends for rifles, combined with the stock’s current multiple at an approximate 40 percent discount to the peer group average on several valuation metrics, we believe shares of SWHC represent a favorable risk/reward tradeoff for patient, value-oriented investors," according to Dionisio.

Other key points mentioned in the report included increased consumer sales in the concealed carry segment, growing law enforcement sales and a potential U.S. military contract.

The $13 price target was derived using an EV/CY15E EBITDA multiple of 6.5x.

Smith & Wesson Holding Corporation recently traded at $9.97, up 1.14 percent.