On Monday, Stifel has adjusted its outlook on shares of Corsair Gaming (NASDAQ:CRSR), reducing the price target to $11 from the previous $16 while keeping a Buy rating on the stock. This new target suggests that Corsair Gaming is now valued at lower multiples than before, specifically 0.8 times the expected 2025 revenue and 10.8 times the anticipated 2025 adjusted earnings before interest, taxes, depreciation, and amortization (AEBITDA).
The firm's decision to lower the price target is based on Corsair Gaming's recent performance, which has shown a lack of financial consistency. The company has made four pre-announcements in the last 12 quarters, indicating unexpected changes in financial outcomes which may have contributed to a less predictable performance.
Stifel's analysis indicates that the revised valuation multiples represent a decrease when compared to historical averages of 1.2 times revenue and 13.2 times AEBITDA. The firm has attributed this discounted valuation to the aforementioned pre-announcements and Corsair's heightened sensitivity to the graphics processing unit (GPU) and central processing unit (CPU) cycle.
Despite the reduction in the price target, Stifel continues to recommend Corsair Gaming as a Buy. The firm's stance suggests that, even with the adjustments made to the financial expectations, they see potential value in the stock at the new price target.
Corsair Gaming's stock will continue to be observed by investors as the market processes the implications of Stifel's updated price target and the company's performance relative to the GPU/CPU cycle.
In other recent news, Corsair Gaming reported a challenging quarter, with Baird Financial Services reducing the company's share price target from $14 to $10 while keeping a neutral rating. The company's recent performance was influenced by a stagnant market for self-built personal computers, which is expected to continue until a new GPU refresh cycle. Despite weaker Components & Systems sales, Corsair saw stronger growth in the Peripherals division.
Corsair's Q1 2024 earnings report revealed a 20% increase in year-over-year revenue in its Gamer and Creator Peripherals segment, despite a net loss of $12.5 million due to subdued demand in the component market. The company's net revenue was $337.3 million, with the Gamer and Creator Peripherals segment contributing $107 million.
The company is planning to expand its presence in the self-built PC market and new gaming categories, anticipating the launch of next-gen GPUs and CPUs in late 2024 and 2025. Corsair also announced upcoming launches of a SIM racing product line and a mobile gaming controller. In terms of future expectations, Corsair maintains its full-year 2024 revenue outlook of $1.45 billion to $1.6 billion.
InvestingPro Insights
In light of Stifel's revised price target for Corsair Gaming (NASDAQ:CRSR), insights from InvestingPro can provide additional context for investors evaluating the stock. An InvestingPro Tip notes that despite recent performance issues, net income for Corsair Gaming is expected to grow this year, which could signal a turnaround for the company.
Moreover, Corsair's stock is currently trading near its 52-week low, which might present a buying opportunity for value investors, especially considering that liquid assets exceed short-term obligations, indicating a solid liquidity position.
InvestingPro Data highlights several key metrics: Corsair Gaming's market cap stands at approximately $889.43 million, reflecting the market's current valuation of the company. The P/E Ratio, although negative at -106.05, is in line with the company's challenging earnings landscape over the last twelve months. Still, the revenue growth of 7.03% over the last twelve months as of Q1 2024 points to a positive trajectory in sales, which could be a harbinger of improved financial performance.
For those looking to delve deeper, there are additional InvestingPro Tips available that could further inform investment decisions, such as the company's volatility and analysts' profitability predictions for the year. To access these insights and more, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. With a total of 12 additional tips listed on InvestingPro, investors can gain a comprehensive understanding of Corsair Gaming's financial landscape.
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