Corsair Gaming, Inc.

CRSR Details

Corsair Gaming, Inc. (NASDAQ: CRSR) is a global leader and innovator in high-performance gaming, streaming, and content creation gear. It creates industry-leading gaming equipment that helps digital athletes perform across PC and console platforms and streaming equipment that allows producers to develop studio-quality material to share with friends or broadcast to millions of viewers. Its two proprietary software platforms, iCUE for gamers and Elgato for video creators, enable easy performance and customization across their respective product families.

Latest News:

• Acquired Controlling stake in iDisplay: CRSR stated that on January 5, 2022, it had purchased a 51% ownership in iDisplay Technology (iDisplay), a leader in electronic development and design with a focus on display technology. CRSR, Elgato, and iDisplay have collaborated on creating and designing several essential products as part of their long-term partnership.
• Launched New Product: CRSR launched the new CRSR ONE i300 range of lightweight desktop PCs on January 04, 2022, the compact addition to its ONE family. This powerful system uses the latest Intel Core processors from the 12th generation, starting with the Intel Core i9-12900K. The ONE i300 is a full-featured gaming PC with a small design that takes up less desk space than a laptop.

Q3FY21 Results:

• Fall in Topline: Due to supply and logistic constraints caused by the COVID-19 pandemic, as well as a shortage of reasonably priced graphics processing units (GPUs), the company reported a 14.43% decline in overall revenue to USD 391.12 million in Q3FY21 (ended September 30, 2021) compared to USD 457.10 million in Q3FY20.
• Drop-in Bottomline: CRSR's net income fell to USD 1.78 million in Q3FY21 from USD 36.36 million in Q3FY20.
• Cash and Debt Position: The company had USD 71.92 million in cash and cash equivalents as of September 30, 2021, and total debt of USD 248.84 million.

Key Risk:

• Geographical Concentration Risk: In Q3FY21 and Q3FY20, revenues from sales to clients in the United States were 41.4% and 39.6%, respectively. As a result, any slowdown or disruption in the US could jeopardize its financial position.

Outlook:

• FY21 Guidance: CRSR forecasts FY21 net sales to be around USD 1.825 - 1.925 billion, with adjusted EBITDA of USD 190 – 205 million as of November 02, 2021. The adjusted operating income is estimated to be in the range of USD 180–195 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 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 has fallen 41.30% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 20.05 to USD 49.60. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 37.57. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 25.21.

Considering the significant correction in the stock price, inorganic endeavors, recent product launches, positive outlook, associated risks, and current valuation, we recommend a "Buy" rating on the stock at the current price of USD 20.21, down 3.44% as of January 06, 2022, at 10:20 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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