Wedbush Raises Turtle Beach Price Target After Blowout Q1, Sees Multiplayer, Mobile Tailwinds For Years To Come

The success of “Fortnite” and other battle royale-style games has been a major tailwind for gaming headset leader Turtle Beach Corp HEAR, driving a huge first-quarter earnings beat that sent shares skyrocketing more than 80 percent Thursday. At least one Wall Street analyst expects the trend to continue.

The Analyst

Wedbush analyst Alicia Reese reiterated an Outperform rating on Turtle Beach and raised the price target from $4 to $12.50.

The Thesis

Turtle Beach is improving its operational efficiency, gaining market share from competitors and benefiting from the rise in popularity of online gaming, Reese said in a Thursday note. (See the analyst's track record here.)

The manufacturer of sound cards and headsets should be able to continue to grow revenue and expand margins, which will boost profits and allow Turtle Beach to reinvest in its products, the analyst said.

“We think the company is poised for continued growth driven by the expansion of battle royale-style games and new gamers entering the market, which should drive both console and PC gaming headsets."

Turtle Beach has a major potential growth catalyst ahead as it expands its business into China, Reese said.

The battle royale hit “Fortnite,” which has more than 50 million global players, singlehandedly drove much of Turtle Beach’s demand in the first quarter — and Reese said the title is also exposing many gamers to the multiplayer format for the first time. Multiplayer games are the most popular trend in gaming at the moment, and multiplayer games tend to rely on communication and directional audio cues.

The multiplayer and mobile gaming trends should benefit Turtle Beach for years to come, according to Wedbush.