Corsair Gaming, Inc.

CRSR Details

Corsair Gaming, Inc. (NASDAQ: CRSR) is a global leader and innovator in high-performance gaming, streaming, and video creation technology. It creates cutting-edge gaming and streaming technology that enables creators to create studio-quality content to share with friends or broadcast to millions of people. iCUE for games and Elgato for video artists, the company's two proprietary software platforms, allow for effortless performance and customization across their respective product lines.

Latest News:

• Collaboration with 2K Partner: On March 03, 2022, CRSR and world-renowned publisher 2K announced a partnership to integrate immersive in-game RGB lighting for all CORSAIR iCUE RGB devices to Gearbox Software's highly anticipated Tiny Tina's Wonderlands. PC players with CORSAIR iCUE products can enjoy exclusive real-time lighting effects that extend the game's action across their entire iCUE setup in the upcoming Borderlands spinoff.

FY21 Results:

• Double-Digit Growth in Topline: The company reported a YoY growth of 11.85% in net revenue to USD 1.90 billion in FY21 (ended December 31, 2021) from USD 1.70 billion in FY20, attributable to YoY growth of 8.07% in Gaming Components and Systems.
• Reduction in Profitability: In FY21, CRSR's net income dropped to USD 100.96 million from USD 103.22 million in FY20.
• Cash and Debt Position: The company had USD 62.42 million in cash and cash equivalents as of December 31, 2021, and total debt of USD 247.65 million.

Key Risk:

• Customer Concentration Risk: In FY21, CRSR's top ten largest customers accounted for 51.7% of its total revenue. In addition, revenue from Amazon represented 26.7% of the total FY21 revenue. Hence, the loss of any of these key customers could hurt the company's financials.
• Product Concentration Risk: DRAM Modules accounted for 28.5% of net revenue in FY21, As a result, any significant drop in average selling prices of our DRAM modules, whether due to falling DRAM IC market prices or any other reason, could harm the company's financials.

Outlook:

• FY22 Guidance: As of FY21, CRSR expects FY22 net sales to be about USD 1.9 – 2.1 billion, with adjusted operating income of of USD 195 - 215 million. The adjusted EBITDA is expected to range between USD 205 and USD 224 million.

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:

CRSR's stock price has fallen 34.19% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 17.45 to USD 42.97. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 25.84.

Considering the significant correction in the stock price, reduction in debt, solid ROE, strategic collaboration, positive outlook, associated risks, and current valuation. We recommend a "Buy" rating on the stock at the current price of USD 21.00, down 0.47% as of March 21, 2022, at 09:57 AM ET.

Three-Year Technical Price Chart (as on March 21, 2022, at 09:57 AM ET). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.