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Why Corsair Gaming Tumbled by 8% Today

By Eric Volkman – Oct 15, 2021 at 5:36PM

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Two analysts have become less optimistic on the stock.

What happened

Corsair Gaming (CRSR -2.30%) probably wished it wasn't in the stock market game on Friday. The video game accessories maker's shares declined by just over 8% on the day, following a pair of analyst downgrades on its shares.

So what

Both Michael Pachter of Wedbush Securities and Baird's Colin Sebastian are now somewhat cooler on Corsair stock. 

Video gamer on sofa with head in hand.

Image source: Getty Images.

Pachter has cut his price target on the shares considerably, to $39 apiece from the previous $45, although he is maintaining his outperform (i.e., buy) recommendation. The prognosticator wrote in a research note that, while Corsair should be able to post an average of 10% revenue growth in the coming years, "we are now seeing some choppiness related to a difficult supply chain environment."

Sebastian is adopting a more bearish stance. In trimming his price target on the stock to $29 per share from the preceding $38, he downgraded his recommendation from outperform to neutral. His rationale is similar to Pachter's -- supply chain issues. Specifically, he believes that shortages of graphics processing units (GPUs) -- essential components in modern video gaming -- will affect demand for related goods.

Now what

The two analyst adjustments come closely on the heels of Corsair's latest business update, which was released on Thursday. The company provided selected third-quarter preliminary earnings figures, specifically net revenue for both the quarter (roughly $391 million) and for the full year ($1.825 billion to $1.925 billion).

Corsair quoted its CEO Andy Paul as saying that "we believe that our 2021 net revenue has been held back at least 10% by global logistics and supply chain issues," particularly involving GPUs. 

While that's understandable -- plus, if the guidance is accurate, Corsair would still see decent growth as far as the full-year forecast is concerned -- the new figures fall notably short of analyst estimates. On average, these are for just over $484 million for the quarter and almost $2.1 billion for the entirety of 2021.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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