Wedbush analyst Rommel Dionisio said in a note to clients that tighter gun control seems more likely. He said that Smith & Wesson could lose 20 percent of sales if tactical rifles are banned.
Following a school shooting in Newtown, Conn., last month, President Barack Obama appointed Vice President Joe Biden to lead a team to come up with "concrete proposals" to curb gun violence. Twenty schoolchildren and six teachers and administrators were killed in the shooting.
Since the shooting, firearm sales have jumped across the country on fears of tighter gun control. Dionisio said in his note that the rise in demand will "be short lived."
A ban on high-capacity magazines could hurt Smith & Wesson even further, Dionisio said.
"Such a ban could likely entice consumers to trade down to lower priced handguns that are lighter, smaller (thus more concealable), and most importantly, cheaper," he said.
Dionisio estimates that an assault weapons ban could cut Smith & Wesson's annual earnings per share by as much as 40 cents. Wall Street expects Smith & Wesson to earn $1.02 a share in its current fiscal year on an adjusted basis and 92 cents a share in fiscal 2014, according to FactSet.
Smith & Wesson did not respond to an emailed request for comment.
Smith & Wesson's shares rose 7 cent to close at $8.33 Friday. They are up about 77 percent from a year ago.