Corsair Gaming stock (CRSR) - Get Corsair Gaming, Inc. Report was the most commented ticker on Reddit on Friday, October 15. Corsair’s Q3 results preannouncement and guidance update did not please investors. The stock reacted poorly, dropping 8% at the end of Friday’s trading session.
Despite recent news, there are still reasons to be bullish and expect significant upside ahead, according to the latest Wall Street reports on CRSR. Today, Wall Street Memes takes a closer look at Corsair stock and the events that have been moving the share price.
(Read more from Wall Street Memes: Progenity Stock: Wall Street Forecasts 45% Upside)
Corsair recent announcements
Last Thursday, October 14, the company provided preliminary third quarter results and updated the financial outlook for 2021. CEO Andy Paul expects full-year net revenue to be dinged by global logistics and supply chain issues to the tune of 10 percentage points, especially due to lack of GPU in the pipeline. The executive offered more detailed guidance for the short term:
“As a result, for the third quarter ended September 30, we expect net revenue to be approximately $391 million. Based on what we know today, we are also updating our 2021 annual net revenue guidance to $1.825 billion to $1.925 billion. We intend to update our 2021 guidance for Adjusted Operating Income and Adjusted EBITDA when we release our third quarter earnings release on November 2, 2021.”
Wall Street’s latest ratings
Three analysts have readily updated their opinions on Corsair stock by lowering their price targets after the company’s preliminary Q3 results.
- Baird analyst Colin Sebastian seemed disappointed by the company’s recent announcement and downgraded Corsair stock to neutral from buy, setting a $29 price target — still suggesting 14% upside potential.
- Credit Suisse’s analyst Matthew Cabral is also skeptical and maintained his neutral rating on CRSR, now aiming at a $26 price for minimal 3% upside potential.
- Wedbush’s analyst Michael Pachter reiterated his bullishness on Corsair amid a difficult supply chain environment. He maintained his buy rating on the stock and $39 price target — 54% upside potential. The analyst continues to expect long-term gross margin expansion driven by outsized growth in Corsair’s high margin peripherals businesses and potential for substantial upside once Corsair can deliver operating leverage.
Wall Street Memes’ take
Supply chain and logistics disruptions have been impacting the broad economy lately, especially the tech space. The issue could continue to put a damper on tech and retail stocks now that it should last longer than previously expected. Moody’s has said that supply chain disruptions will “get worse before they get better” as global economic recovery continues to gather steam.
To invest in Corsair stock, we think that a long-term perspective is needed. Independent of near-term supply challenges, the gaming space still has growth potential, as revenues should climb to $257 billion by 2025. At a company-specific level, Corsair has been improving margins since 2018, which bodes well for earnings firepower once demand and supply find an equilibrium once again.
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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)