Analyst: Headset Maker Turtle Beach Continues To Benefit From 'Fortnite,' Battle Royale Gaming

The rise of battle royale and online gaming are significant catalysts for companies like Turtle Beach Corp. HEAR, which supplies gaming headphones and accessories.

The Analyst

D.A. Davidson analyst Tom Forte reiterated a Buy rating on Turtle Beach with a $30 price target.

The Thesis

Based on a recent Bloomberg article, "Fortnite" has attracted over 200 million users — an increase of 60 percent since June, Forte said in a Wednesday note. (See his track record here.) 

“We see this as a CLEAR indication that the popularity of "Fortnite" remains robust. On a short-term basis, this should result in elevated sales of gaming headsets, which should be positive news for Turtle Beach, primarily, and Logitech International SA LOGI, secondarily.”

"Call of Duty: Black Ops 4" And "Red Dead Redemption 2," both of which have battle royale formats, have experienced strong initial success and had a positive impact on gaming sales in October, the analyst said. 

On a long term basis, Forte said he expects the success of "Fortnite" to further expand the overall gaming user base, including the penetration of a younger and more diverse audience.

The standard refresh rate of headsets has diminished from 24 months to a more generalized 18 months, he said. 

“We believe this could result in better than-expected sales for Turtle Beach in 2019. This is important, in our view, as we see investor anxiety regarding its 2019 sales performance as one of the main reasons its shares have not been stronger of late.”

Price Action

Turtle Beach shares were surging 8.27 percent to $17.80 at the time of publication Wednesday. 

Related Links:

Turtle Beach Sets Q4 Guidance To 'Easy Difficulty': The Sell-Side Reacts

DA Davidson: Turtle Beach Winning On Secular Shift In Gaming Trends

'Fortnite' screenshot courtesy of Epic Games.