Corsair Gaming, Inc.

CRSR Details

Corsair Gaming, Inc. (NASDAQ: CRSR) is dedicated to supplying and creating high-performance gaming and content creation equipment for all gamers and content creators. Its operating segments are 1) Gaming and Creator Peripherals, which sells gaming keyboards, mice, headsets, controllers, capture cards, stream decks, USB microphones, studio accessories, and other peripherals; and 2) Gaming Components and Systems, offering power supplies, cooling solutions, computer cases, DRAM modules, and gaming PCs.

Latest News:

• Launching a New Monitor: On September 30, 2021, CRSR launched the XENEON 32QHD165 gaming monitor, which has a 32-inch QHD screen and an IPS LED panel generating 2560x1440 images. It offers powerful specs and smart features for gamers and creators and comes with a refresh rate of up to 165Hz, an AMD FreeSync certificate, and NVIDIA G-SYNC compatibility.
• Introduction of a Gaming Mouse: On September 16, 2021, the company released the exceptionally lightweight SABRE RGB PRO WIRELESS gaming mouse built with the SLIPSTREAM WIRELESS technology that provides esports-ready, high-performance wireless speed.

Q2FY21 Results:

• Improvement in Revenue: In Q2FY21 (ended June 30, 2021), CRSR's net revenue was USD 472.90 million, 24.32% higher than USD 380.41 million reported in Q2FY20, resulting from robust sales growth across all product categories.
• Net Income Growth: Net income for Q2FY21 increased to USD 27.75 million from USD 22.60 million in Q2FY20.
• Decent Balance Sheet: As of June 30, 2021, the company had cash & cash equivalents of USD 134.57 million and total debt of USD 270.01 million.

Key Risks:

• Customer Concentration Risk: In H1FY21, CRSR's top ten largest customers comprised 50% of its net revenue, with Amazon alone generating 24.6% of the revenue during this period. Hence, the loss of any of these critical customers could hurt the company's financials.
• Seasonal Business: The company's unit shipments are usually higher in the Q3 and Q4 periods due to the spending patterns of the gamers. This seasonality trend, which is expected to continue, can seriously harm CRSR's business.

Outlook:

• Net Revenue Estimate: In Q3FY21, CRSR expects to generate around USD 391 million in net revenue, with annual revenue for FY21 estimated to range from USD 1.825 to USD 1.925 billion.

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

CRSR Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

CRSR's stock price decreased 35.77% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 19.60 to USD 51.37. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 34.89. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 31.07.

Considering the significant correction in the stock price, decent balance sheet, recent product launches, positive outlook, and associated risks, we recommend a "Buy" rating on the stock at the closing price of USD 24.49, down 1.21% as of October 18, 2021, 10:35 AM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

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