Market Overview

Turtle Beach Is Targeting Market Share Expansion, Says Bullish Wedbush

Turtle Beach Is Targeting Market Share Expansion, Says Bullish Wedbush
'Fortnite' Expands User Base Over 200% In 2018: How It Got There
Analyst: Headset Maker Turtle Beach Continues To Benefit From 'Fortnite,' Battle Royale Gaming

Turtle Beach Corp (NASDAQ: HEAR) shares were lower Thursday after investors concluded that a slowdown in "Fortnite" revenue growth doesn't bode well for the maker of gaming headsets.

On Friday, Wedbush expressed confidence in Turtle Beach's growth prospects after meeting with the company's management. 

The Analyst

Wedbush's Alicia Reese maintained an Outperform rating on Turtle Beach's stock with an unchanged $42 price target.

The Thesis

After meeting with Turtle Beach, Reese said Wedbush's expectation for the headset maker to report upside to 2018 revenue and EBITDA estimates of $255 million and $45 million, respectively, remain unchanged. (See the analyst's track record here.) 

The company's headsets are an ideal holiday gift-giving idea, not only for "Fortnite" players, but for players of any of the major upcoming video game releases, including "Call of Duty," "Battlefield" and "Red Dead Redemption," the analyst said. 

Turtle Beach is expected to use its free cash flow to invest in expanding its share of the PC gaming market, where it has an "insignificant" market share, Reese said. By contract, the company accounts for a 45-percent market share of the $1-billion global console gaming headset market, she said. 

By geographic region, Turtle Beach will look to first expand its products in the North American and European market, the analyst said. Once it gains a 5-percent market share in the PC headset space, Turtle Beach will likely look to expand into Asia and China, likely in 2020, she said. 

The popularity of "Fortnite" will benefit Turtle Beach for years to come, as the popular game brought a "massive swath" of new gamers into console, PC and mobile gaming, according to Wedbush. New gamers are likely to account for a big part of Turtle Beach's business as consumers upgrade their headsets to higher-priced devices every two years on average, the sell-side firm said. 

Price Action

Turtle Beach shares were down 2.6 percent at $27.22 at the time of publication Friday. 

Related Links:

Turtle Beach Earnings Preview: Setting Up For A Short Squeeze?

A Bull-Bear Look At Turtle Beach

A Turtle Beach sound card. Public domain photo via Wikimedia. 

Latest Ratings for HEAR

Aug 2018OppenheimerMaintainsOutperformOutperform
Aug 2018WedbushMaintainsOutperformOutperform
Jul 2018DA DavidsonInitiates Coverage OnBuy

View More Analyst Ratings for HEAR
View the Latest Analyst Ratings

Posted-In: Alicia Reese Fortnite Gaming ConsoleAnalyst Color Price Target Reiteration Top Stories Analyst Ratings Best of Benzinga


Related Articles (HEAR)

View Comments and Join the Discussion!

Latest Ratings

BAPItau BBAUpgrades274.0
DVNJP MorganDowngrades37.0
EOGJP MorganUpgrades118.0
EXPDGoldman SachsDowngrades68.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Gap Shares Drop Despite Q2 Beat; The Sell-Side Weighs In

Mid-Afternoon Market Update: Crude Oil Up 1.75%; Splunk Shares Jump After Strong Q2 Earnings