HEAR Stock Forecast: Why This Gaming Audio Stock Is Soaring Today

HEAR Stock Has More Upside Ahead

Turtle Beach Corp (NASDAQ:HEAR) is making headlines today, and for all the good reasons. The company reported strong selected preliminary third-quarter results on October 11, which were way ahead of its previously released guidance. This has led to HEAR stock going through the roof.

The company’s sales and profits have risen significantly above the prior guidance on account of growth in the industry and gains in market share. CEO Juergen Stark said that the momentum built in the first half of 2018 continued through the third quarter.   

Turtle Beach now expects to post net revenue ranging between $73.0 million and $74.0 million against the previous guidance of about $65.0 million. This is an increase of 103%-106% over the last year. (Source: “Turtle Beach Reports Strong Selected Preliminary Third Quarter 2018 Results,” Turtle Beach Corporation, October 11, 2018.)

Net income is likely to range between $0.74 and $0.78 per share, in contrast to the previous guidance of $0.44 per share.

Moreover, the adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) is expected to be approximately $17.0 million, which is more than five times the EBITDA reported in the third quarter of last year.

Turtle Beach leads in the gaming headset market and has stayed true to its mission of helping gamers play their best, at every level and in every game. The company’s headsets are considered to be the best when it comes to gaming audio.

As per the company management, the strong growth in demand for gaming headsets that had come about with the rise of the “battle royale” genre continued through the third quarter. This drew new gamers into the market, which led to veteran gamers upgrading their gear and increasing the installed base of gaming headsets.

The company is upbeat about the upcoming launches this month, such as Call of Duty: Black Ops 4 and Red Dead Redemption 2. These will likely to lead to more high-headset-usage games in the near future.

HEAR stock is soaring on account of investor optimism surrounding business performance going forward. HEAR stock closed the last trading session up by 4.7%.

Though there may be short-term volatility in the coming days, HEAR stock is likely to continue going higher in the future. As the following stock chart shows, HEAR stock has gone up by more than five times in the last one year.

Chart courtesy of StockCharts.com

Its stellar performance may not be sustained in the short term, but the long-term trend for triple-digit returns remains in place.

Turtle Beach has been dominating the market in console gaming headsets and currently has a 45.5% revenue share year-to-date through June 2018, as per NPD’s latest update.

Moreover, the company has also held over 40% market share for the past nine consecutive years. (Source: “Global Gaming Audio Leader Turtle Beach Unveils Plans For PC Gaming Market Expansion With All-New Atlas Line Of Headsets,” Turtle Beach Corp, August 16, 2018.)

The management, in its press release, also reported the results of its surveys. They indicated that, on average, gamers replace their headsets every 20 to 24 months. This will likely lead to an increased number of gaming headset users going forward, expanding the core headset market further.

Through these strong results, the company expects to further reduce debt over time and undertake long-term growth investments. This bodes well for HEAR stock.

Analyst Take

Turtle Beach is a global leader in gaming audio and boasts of award-winning gaming headset with a focus on the PC market. The company’s product portfolio of outstanding quality headsets for every level of gamer continues to perform well.

Given the current performance, HEAR stock is likely to continue performing well in the near future. Investors with interest in the gaming market should not miss the opportunity in HEAR stock.