Smith & Wesson Holding Corp. (NASDAQ: SWHC) is sharply higher today after shocking Wall Street with a better-than-expected fourth-quarter forecast. Last night, the company reported that strong demand for its handguns and tactical rifles sent revenue up 20% during the quarter to $99.5 million, outpacing analysts' expectations for sales of $90.83 million. SWHC's full fourth-quarter results will be reported Monday, June 22.
Additionally, SWHC said it will buy perimeter security firm Universal Safety Response for up to 9.7 million in shares and up to $26.2 million in cash. The acquisition is expected to be immediately accretive, excluding the purchase accounting impact on a per-share basis.
The double dose of news has propelled SWHC to a gain of more than 18% today, extending the equity's year-to-date gain of 156.4%. Today's rally has snapped the shares out of their recent slump, and SWHC could close today atop its 10-day and 20-day moving averages for the first time since May 6.
The stock's spike higher is likely attributable to a short-squeeze rally, since short interest on the equity rose by 81.2% during the past month. Now, these bearish bets account for a healthy 11.8% of SWHC's available float, which translates to roughly a week's worth of buying pressure at the stock's average daily trading volume.