On Tuesday, Stifel maintained a Buy rating on Turtle Beach (NASDAQ:HEAR) Corporation (NASDAQ:HEAR) and increased the price target to $20.00 from the previous $17.00. The firm highlighted mixed performance in the gaming accessory category in key markets for Turtle Beach.
In the United States, retail sales for video game accessories saw a slight increase of 1% year-over-year during July and August, while video game hardware sales experienced a 13% year-over-year decline.
This contrasted with the first half of 2024, where consumer spending on gaming peripherals rose by 5% year-over-year, including significant growth in headset and third-party controller sales.
Despite the overall deceleration in peripheral sales compared to the first half of the year, August showed robust growth for headsets. In contrast, Europe saw a mid-single-digit percentage drop in accessory unit sales year-over-year for the July-September period. The hardware segment in Europe also faced a sharp decline, with sales falling by more than 20% over the same timeframe, according to data from GSD.
The anticipation of Nintendo's next console system, referred to in unconfirmed reports as the Switch (NYSE:SWCH) 2, was also noted as a potential catalyst for Turtle Beach shares. Reports from the past week suggest a possible launch window for the new console in March or April of 2025.
Given that PDP, a Turtle Beach brand, is estimated to derive around 50% of its sales from the Switch platform, the firm sees the upcoming product release as a positive driver for the company's stock.
InvestingPro Insights
Turtle Beach Corporation's (NASDAQ:HEAR) financial metrics and market performance offer additional context to the gaming accessory market dynamics discussed in the article. According to InvestingPro data, the company has shown impressive revenue growth, with a 59.39% increase in quarterly revenue as of Q2 2024. This aligns with the article's mention of growth in headset sales and consumer spending on gaming peripherals.
InvestingPro Tips highlight that analysts anticipate sales growth in the current year, which could be influenced by the potential launch of Nintendo's new console system in 2025, as mentioned in the article. The company's significant return over the last week (9.92%) and strong one-year price total return of 103.35% suggest investor optimism, possibly reflecting expectations around future gaming hardware releases and accessory demand.
However, it's worth noting that Turtle Beach is currently not profitable over the last twelve months, with a negative EPS of -$0.13. Despite this, InvestingPro Tips indicate that analysts predict the company will be profitable this year, which could be tied to the anticipated growth in the gaming accessory market.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for Turtle Beach Corporation, providing a deeper understanding of the company's financial health and market position.
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