Corsair Gaming, Inc.

CRSR Details

Corsair Gaming, Inc. (NASDAQ: CRSR) is a global leader and innovation in high-performance gaming, streaming, and video creation. It develops cutting-edge gaming and streaming technology that allows creators to produce studio-quality entertainment that can be shared with friends or broadcast to millions. The company's two proprietary software platforms, iCUE for games and Elgato for video artists, allow seamless performance and customization throughout their respective product ranges.

Latest News:

• Launch of HD60: CRSR announced the launch of HD60 X, a powerful new external capture card, on April 5, 2022. With cutting-edge specifications and seamless compatibility with the latest gaming consoles, the HD60 X allows anyone to stream and record their gameplay in the finest possible quality. The HD60 X builds on the success of the HD60 S+ with all-new architecture and backports to hide cords. The plug-and-play gadget connects to a console and feeds footage to a game display and a computer. You may then play high-resolution games while concurrently live streaming in Full HD 1080p60 quality to Twitch or YouTube and recording 1080p60 HDR10 footage to your hard drive.

FY21 Results:

• Double-Digit Growth in Topline: The company reported a YoY growth of 11.85% in net revenue to USD 1.90 billion in FY21 (ended December 31, 2021) from USD 1.70 billion in FY20, attributable to YoY growth of 8.07% in Gaming Components and Systems.
• Reduction in Profitability: In FY21, CRSR's net income dropped to USD 100.96 million from USD 103.22 million in FY20.
• Cash and Debt Position: The company had USD 62.42 million in cash and cash equivalents as of December 31, 2021, and total debt of USD 247.65 million.

Key Risk:

• Customer Concentration Risk: In FY21, CRSR's top ten largest customers accounted for 51.7% of its total revenue. In addition, revenue from Amazon represented 26.7% of the total FY21 revenue. Hence, the loss of any of these key customers could hurt the company's financials.
• Product Concentration Risk: DRAM Modules accounted for 28.5% of net revenue in FY21. As a result, any decline in average selling prices of CRSR’s DRAM modules, whether due to falling DRAM IC market prices or any other reason, could hurt its financials.

Outlook:

• FY22 Guidance: As of FY21, CRSR anticipates its FY22 net sales to be USD 1.9 – 2.1 billion, together with an adjusted operating income of USD 195 - 215 million. The adjusted EBITDA is expected to range between USD 205 and USD 224 million.

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 FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation:

CRSR's stock price has fallen 35.20% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 17.45 to USD 42.97. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 25.05.

Considering the significant correction in the stock price, decrease in debt, robust ROE, latest launches, positive outlook, associated risks, and current valuation. We recommend a "Buy" rating on the stock at the current price of USD 20.54, up 0.83% as of April 11, 2022, at 07:01 AM PDT.

Three-Year Technical Price Chart (as on April 11, 2022, at 07:01 AM PDT). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.