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August 19, 2009 > Sector Snap: Gun makers face declining demand

Sector Snap: Gun makers face declining demand

Submitted By AP Wire Service

NEW YORK (AP), Aug 14 _ U.S. sales of handguns, which surged after Barack Obama won the presidential election, appear to be cooling off, a Wall Street analyst said Friday.

The number of FBI background checks of potential buyers last month climbed 8 percent over the year-earlier level, marking a continued slowdown from April when the FBI recorded a 30 percent year-over-year increase in the number of checks, CL King analyst Jim Barrett said.

May checks were up 18 percent and June's gained 15 percent. Barrett said he expects August checks to be up only 7 percent.

``We think the statistics indicate that the market is cooling off and that Sturm Ruger & Co.'s sales growth will cool as well, probably starting in the fourth quarter when it faces very tough comparisons versus a year ago, when sales rose 72 percent,'' the analyst wrote in a client note.

He reiterated his ``Neutral'' rating on the shares.

Besides Sturm Ruger, Smith & Wesson also experienced a spike in handgun demand after Obama was elected.

In morning trading, Sturm Ruger fell 37 cents, or 3 percent, to $11.93, and Smith & Wesson declined 7 cents to $5.84.

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