Earnings Update: Turtle Beach Corporation (NASDAQ:HEAR) Just Reported Its Second-Quarter Results And Analysts Are Updating Their Forecasts

The analysts might have been a bit too bullish on Turtle Beach Corporation (NASDAQ:HEAR), given that the company fell short of expectations when it released its quarterly results last week. Revenues missed expectations somewhat, coming in at US$48m, but statutory earnings fell catastrophically short, with a loss of US$0.93 some 150% larger than what the analysts had predicted. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Turtle Beach

Taking into account the latest results, the current consensus from Turtle Beach's six analysts is for revenues of US$268.9m in 2023. This would reflect an okay 6.8% increase on its revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 71% to US$0.97. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$270.3m and losses of US$0.54 per share in 2023. So it's pretty clear the analysts have mixed opinions on Turtle Beach even after this update; although they reconfirmed their revenue numbers, it came at the cost of a massive increase in per-share losses.

The consensus price target held steady at US$15.00, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Turtle Beach analyst has a price target of US$17.00 per share, while the most pessimistic values it at US$14.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Turtle Beach is an easy business to forecast or the the analysts are all using similar assumptions.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Turtle Beach's rate of growth is expected to accelerate meaningfully, with the forecast 14% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 2.5% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.3% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Turtle Beach is expected to grow much faster than its industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Turtle Beach. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Turtle Beach analysts - going out to 2025, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Turtle Beach that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.