Corsair Gaming, Inc. (NASDAQ:CRSR) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance.
Following the upgrade, the most recent consensus for Corsair Gaming from its eight analysts is for revenues of US$1.9b in 2021 which, if met, would be a solid 12% increase on its sales over the past 12 months. Statutory earnings per share are presumed to swell 11% to US$1.33. Previously, the analysts had been modelling revenues of US$1.7b and earnings per share (EPS) of US$1.04 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 18% to US$48.33 per share. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Corsair Gaming, with the most bullish analyst valuing it at US$55.00 and the most bearish at US$37.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Corsair Gaming shareholders.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Corsair Gaming's revenue growth will slow down substantially, with revenues next year expected to grow 12%, compared to a historical growth rate of 20% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.5% next year. Even after the forecast slowdown in growth, it seems obvious that Corsair Gaming is also expected to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Corsair Gaming could be worth investigating further.
Better yet, our automated discounted cash flow calculation (DCF) suggests Corsair Gaming could be moderately undervalued. You can learn more about our valuation methodology on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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