DA Davidson: Strong Gaming Accessory Sales A Bullish Signal For Turtle Beach

Chances are that many of the gamers you know received a new headset for Christmas.

And that means investors should buy stock in leading gaming headset maker Turtle Beach Corp HEAR, according to D.A. Davidson.

The Analyst

Analyst Tom Forte reiterated a Buy rating on Turtle Beach with a $30 price target. 

The Thesis

Forte’s reminder came as many other investors appeared to see the same thing he did: a report from retailer GameStop Corp. GME that said its holiday same-store sales were up, primarily on the strength of a 28.7-percent increase in the sale of video game accessories.

The news sent Turtle Beach’s stock surging Friday. 

“Given GameStop is a top-five retailer for Turtle Beach, we believe this is a positive indication for HEAR,” Forte said in a note. 

Forte said he was most encouraged by GameStop’s accessories growth rates through the past year, noting that it reported higher growth each quarter.

Turtle Beach saw its business take off last year thanks to the incredibly popular "Fortnite" game, which has a “battle royale” mode that requires a headset, the analyst said — and the game's success has continued. 

Strong headset sales also should be seen as good news for Logitech International SA LOGI, Forte said. 

D.A. Davidson has a Buy rating on Logitech with a $58 price target. The company, which owns ASTRO Gaming, is expected to report earnings Monday.

Price Action

Turtle Beach shares were up 9.29 percent at $16.83 at the time of publication Friday, while Logitech was up 1.95 percent at $33.54. 

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