Strength Of 'Red Dead Redemption 2,' 'Call Of Duty' Bode Well For Turtle Beach

Turtle Beach Corp HEAR's stock is up nearly 500 percent year-over-year, and it’s still got plenty of game left, according to DA Davidson.

The Rating

Analyst Tom Forte maintained a Buy rating on the stock with a $30 price target.

The Thesis

Inspired by an analysis of discounted cash flow and NPD data, Forte anticipates a year-over-year doubling of adjusted earnings before interest, tax, depreciation and amortization (EBITDA) margins.

Trends toward battle royale and e-sports, as well as the October performances of Activision Blizzard, Inc. ATVI and Take-Two Interactive Software TTWO, lend additional confidence. The rival pair led record group sales ($1.55 billion) for the month on games similar to those Turtle Beach produces.

“October was a record thanks to the latest Call of Duty and Red Dead Redemption 2 — both games with battle royale formats, which should bode well for Turtle Beach,” Forte wrote in a note. “[...] Red Dead Redemption 2 was 3x its predecessor, an indication to us of the popularity of battle royale games and that the base of video game enthusiasts has expanded.”

Additionally, Turtle Beach led last month in headsets and headphones — a category whose sales doubled for the period.

Price Action

At time of publication, shares were up 6 percent at $14.80.

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