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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 current consensus from Corsair Gaming's eight analysts is for revenues of US$1.9b in 2021 which - if met - would reflect a solid 12% increase on its sales over the past 12 months. Per-share earnings are expected to ascend 11% to US$1.33. Before this latest update, the analysts had been forecasting revenues of US$1.7b and earnings per share (EPS) of US$1.04 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
It will come as no surprise to learn that the analysts have increased their price target for Corsair Gaming 18% to US$48.33 on the back of these upgrades. 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. The most optimistic Corsair Gaming analyst has a price target of US$55.00 per share, while the most pessimistic values it at US$37.00. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Corsair Gaming's revenue growth is expected to slow, with forecast 12% increase next year well below the historical 20% p.a. growth over the last 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. So it's pretty clear that, while Corsair Gaming's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. 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.
Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Corsair Gaming that suggests the company could be somewhat undervalued. For more information, you can click through to our platform to learn more about our valuation approach.
This article by Simply Wall St is general in nature. 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.
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