Wedbush Sees Results Below Expectations For Turtle Beach

In a report published Tuesday, Wedbush analyst Michael Pachter reiterated an Outperform rating and $15.00 price target on Turtle Beach HEAR. In the report, Wedbush noted, “We believe that Turtle Beach will remain the dominant player in the gaming headset market, and expect the company's lifestyle brands to gain traction in the much larger headset market due to the company's differentiated technology and compelling value proposition. Over time, we think that the company's Parametric HyperSound technology has the potential to generate significant revenue from a wide variety of applications for the hearing impaired and for various retail applications, but we have chosen to value this segment of the business at approximately the implied price paid upon Parametric's merger with privately held Turtle Beach late last year. "We arrive at our $15 price target by a sum-of-the-parts valuation: applying an 12x multiple to our 2015 Turtle Beach segment EBITDA estimate and attributing $100 million of value for the option upside of the still nascent Parametric Sound HyperSound segment. Our multiple is only slightly higher than the market multiple for Turtle Beach's peers, which we believe is warranted, given the company's superior growth prospects as we enter a new console cycle.” Turtle Beach closed on Monday at $8.29.