Alliant Techsystems Inc. (ATK), the world’s largest ammunition maker, fell the most in almost five months after Cowen & Co. downgraded the shares partly due to potential fallout from the mass shooting in Connecticut.
The Arlington, Virginia-based company known as ATK declined 2.9 percent to close at $63.30 in New York for the biggest drop since Aug. 10. The shares earlier slid as much as 4.5 percent.
Cowen analyst Gautam Khanna today downgraded ATK to neutral from outperform. ATK outperformed the Standard & Poor’s 500 Index in the fourth quarter of 2012, reaching levels similar to large-cap defense firms and “limiting relative upside,” Khanna wrote.
He also cited a risk to earnings following last month’s mass shooting at an elementary school in Newtown, Connecticut. The Dec. 14 massacre left 28 dead, including the gunman, his mother and 20 children.
President Barack Obama’s pledge to review gun-control regulations in the wake of the shooting is a “long-term perceived risk” to ATK’s civil ammunition business, Khanna wrote today in a note to clients.
The company sells ammunition to the U.S. military, law enforcement agencies and sporting outlets. It lists Wal-Mart Stores Inc. (WMT) and outdoor retailer Cabela’s Inc. (CAB) as key customers in its security and sporting segment, which accounted for 22 percent of the ATK’s $4.61 billion in fiscal 2012 revenue, according to U.S. Securities and Exchange Commission filings.
Cerberus Capital Management LP, the New York-based investment firm, said it will seek to sell Freedom Group Inc., the largest U.S. gunmaker, after one of its rifles was used in the Connecticut shooting.
Cerberus made the announcement hours after California Treasurer Bill Lockyer said he would propose that the state’s public pension funds, the two largest in the U.S., divest investments in firearm manufacturers that make guns prohibited under state law.
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