Turtle Beach Corp (HEAR) Q4 2018 Earnings Conference Call Transcript

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Turtle Beach Corp (NASDAQ:HEAR) Q4 2018 Earnings Conference Call March 14, 2019, 5:00 p.m. ET

Contents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen, and welcome to the Turtle Beach fourth quarter and full year 2018 conference call. At this time, all participants are in a listen-only mode. For assistance during the conference, press * and 0 and an operator will be happy to assist you. There will be a question and answer session after the prepared remarks. To participate in this session, just simply press *1.

Before we get started, we will be referring to the press release filed today that details the company's 2018 results as well as the press results announcing the acquisition of ROCCAT, a gaming accessory business, both of which can be downloaded from their investor relations page at corp.turtlebeach.com. On that website, you will also find an earnings presentation that supplements the information to be discussed on today's call.

Finally, a recording of the call will be available in the investor relations section of the company's website later this evening. Please be aware that some of these comments made during the call may include forward-looking statements within the meaning of the Federal Securities Law. Statements about the company's beliefs and expectations containing words such as may, will, could, believe, expect, anticipate, and similar expressions constitute forward-looking statements.

These statements, risks, and uncertainties regarding the company's operations and future results that could cause Turtle Beach Corporation's results to differ materially from management's current expectations.

The company encourages you to review the safe harbor statements and risk factors containing today's press releases and in their filings with the Securities and Exchange Commission, including without limitation their most recent quarterly report on Form 10-Q and a report on Form 10-K and other periodic reports, which identify specific risk factors that also may cause actual results or events to differ materially from those described in forward-looking statements.

The company does not undertake to publicly update or revise any forward-looking statements after the date of this conference call. The company also notes that on this call, they will be discussing non-GAAP financial information. The company is providing that information as a supplement to information prepared in accordance with accounting principles generally accepted in the United States or GAAP. You can find a reconciliation of these metrics to their reported GAAP results in the reconciliation tables provided in today's earnings release and presentation.

Now, I will turn the call over to Juergen Stark, the company's Chief Executive Officer. Juergen?

Juergen Stark -- Chief Executive Officer

Good afternoon, everyone, and thank you for joining us. What a year it's been. We're debt-free, delivered a record year across every financial metric, and took key strategic actions to drive our long-term growth. We're making two exciting announcements today, one covering our record results for the fourth quarter and full year and the other covering the acquisition of ROCCAT, a leading maker of PC gaming accessories that we expect will contribute significantly to our growth in the future.

As communicated in our pre-release, we had a terrific fourth quarter, which capped off a truly transformational year for Turtle Beach. We achieved record sales and profits, eliminated our long-term debt, and maintained disciplined spending, all of which culminated in a dramatic increase in shareholder value. When you think of where we sit today compared to the same time in 2018, I think you would agree it's been an incredible year and very beneficial for shareholders.

As early as January of last year, we detected that the powerful new battle royale games led by Fortnite were driving new gamers and new headset users into the market. We weren't sure how Fortnite's surge would play out. While we were somewhat cautious in our forecasts, we quickly put ourselves in a position to capitalize on the upside if the surge continued.

By February, we had plans in place with our factory to increase supply to capture the growth, including our market share gains. We spent many months chasing demand, even air-freighting product, but by mid-year, we had ramped our production to the point where we had no meaningful supply gaps and could enjoy a record fourth quarter.

In March, we resolved loan and covenant issues. In April, we successfully executed a reverse stock split and we retired the Series B Preferred, a $19.4 million liability that was growing at 8% a year, all of which contributed to 3.5 times increase in our market cap from January to April.

As 2018 progressed, we grew more confident that this Fortnite surge was note just a blip, but rather represented a material and enduring increase in the base of gamers who have a need to purchase headsets, either because they're new to this style of gaming or because they wanted to upgrade to a higher quality headset and improve their performance.

Millions of new gaming headset users entered the market last year and we believe that they will now become part of the larger install base that upgrades and replaces their headsets going forward. Of course, we've got a great line of headsets for them to choose from.

Looking at the fourth quarter more closely, the industry performed in line with our expectations, with NPD reporting that the total console gaming headsets market grew about 49% over 2017. This continued strong growth was not a surprise, but what did surprise us was how we were able to continue growing our market share. According to NPD, our North American Sales outperformed the market, increasing about 56% in the fourth quarter, with 47% overall market share.

We believe this is a testament to our innovative products, distribution, and brand, not to mention the strength of our operational capabilities that allowed us to increase supply quickly. We also ensured that we had supply on hand to cover any potential upside and strategically exited the year with appropriate higher levels of inventory accordingly. We also exited 2018 with channel inventory in a very good place thanks to excellent coordination with our large retailers.

After John's comments, I will discuss the ROCCAT acquisition in more detail, but I didn't want to say upfront how excited we are about this strategically important move. We initiated activity last year to look at ways to accelerate our growth plans. In one move, the ROCCAT deal gives us a strong portfolio of PC gaming keyboards and mice, adds to our recently launched line of PC gaming headsets, and gives us a great combined product portfolio with 27 core models to pursue the $2.9 billion market for PC gaming mice, keyboards, and headsets.

Before turning it over to John, I'd like to acknowledge every area of our company for doing a spectacular job in 2018. We more than leveraged the strong headset market based on great execution and I'm very proud of every person at Turtle Beach for their efforts this past year. Personally, I'm grateful to be working with all of you as we look forward to the new opportunities in front of us.

John will provide the details on fourth quarter and full year results and then I will come back to address how we are looking at 2019. John?

John Hanson -- Chief Financial Officer

Thanks, Juergen and good afternoon, everyone. Before I discuss the fourth quarter results, let me briefly reference our Form 8-K filing today covering the accounting treatment of warrants issued as part of the transaction to retire the Series B Preferred stock back in April 2018. As part of that transaction, we issued a combination of cash, stock, and warrants. The warrants were treated as an equity instrument when we filed our 10-Qs for the second and third quarters.

In connection with our year-end audit, we determined that the proper accounting of these warrants was as a financial instrument obligation because of a specific clause that entitles the holder to elect to receive a cash value in the event of a fundamental transaction such as a change in control. One of the effects of this change in accounting for warrants is the requirement that they be marked to market each quarter using a Black-Scholes valuation model with the change included in other non-operating expense or income each period.

As a result of the change in the accounting treatment for the warrants and the marked to market requirement, our net income and earnings per share have been restated for the quarterly and year to date periods in the second and third quarters and our fourth quarter net income and earnings per share reflect the impact of this requirement. This change had no impact on any of the key metrics that indicate the operational performance of the business. Our revenues, gross profit, operating income, adjusted EBITDA, and cash flows, are unchanged. Going forward, our guidance will exclude the impact of the marked to market requirement given its dependence on future stock prices utilized in Black-Scholes calculations.

Now, on to the fourth quarter results -- net revenue in the fourth quarter of 2018 increased 40% to a company record $111.3 million compared to $79.7 million in the fourth quarter of 2017. The significant year over year increase was the result of strong market demand for console gaming headsets driven by continuing increased usage of gaming headsets, particularly among battle royale players along with the company's increase in market share over 2017.

Net revenue in the fourth quarter of 2018 slightly exceeded the high-end of the company's preliminary results of $111 million announced last month. Gross margin in the fourth quarter increased 90 basis points to 38.5% compared to 37.6% in the fourth quarter of 2017. This is the highest level of fourth quarter gross margins the company has ever reported. The increase was primarily due to continued higher volumes driving fixed cost leverage.

Operating expenses in the fourth quarter of 2018 increased to $17.4 million from $14 million in the same quarter of 2017. This was due primarily to an increase in marketing spend primarily related to new PC headset launches, revenue-driven sales-based commissions and expenses, and other operational performance-based compensation.

As a percent of net revenue, operating expenses declined by approximately 200 basis points to 16% compared to 18% a year ago, reflecting favorable operating leverage and continued tight management of opex. This put our operating margins at 23%, up from 20% a year ago. This is also the highest level of operating margin for any quarter in our history.

Net income in the fourth quarter increased 73% to a record $24.6 million or $1.33 per diluted share based on 16.2 million diluted shares outstanding compared to 14.2 million or $1.15 per diluted share based on 12.4 million diluted shares outstanding in the year ago quarter.

Excluding the impact of the marked to market of the warrants, our net income was up 51% to $21.5 million and our earnings per share was $1.33. Note that the above $24.6 million of GAAP net income includes approximately $3.1 million of an unrealized gain due to the marked to the market treatment of the warrants. But this $3.1 million does not get included into GAAP earnings per share on a fully diluted basis. So, the earnings per share is the same.

Adjusted EBITDA in the fourth quarter of 2018 increased $7.8 million or 45% to a record $25 million compared to $17.2 million in the year ago quarter. Cash provided by operating activities in 2018 increased by $38.8 million from 2017, mostly as a result of higher gross receipts from the significant increase in revenue, partially offset by a resulting increase in inventory levels.

Now, turning to the balance sheet, we ended the quarter with cash and cash equivalents of $7.1 million with $37.4 million outstanding under our $80 million revolving credit facility compared to $5.2 million in cash and cash equivalents and $38.5 million outstanding under the revolving credit facility one year ago. Inventories at December 31st, 2018 were $49.5 million compared to $27.5 million at December 31, 2017. The increased inventory level is the result of higher revenue run rate for the business and our intentional effort to have sufficient buffer inventory to capture any further upside in sales.

Total outstanding debt principle as of December 31st, 2018 decreased to $37.4 million compared to $72.1 million at December 31st, 2017. As a reminder, on December 17th of 2018, we amended our revolving credit facility with Bank of America and paid off the remaining balances on both our term loan and subordinated debt materially deleveraging the company. The only remaining debt outstanding at December 31, 2018 was amounts under our revolving credit facility.

Net of our cash position net debt, including the Series B Preferred, was $86 million at year end 2017 and stood at $30 million at the end of 2018, leaving only revolver debt on the books at the end of 2018. Today, we have zero borrowings on the revolver. In addition, the outstanding warrants are classified as a financial instrument obligation of $7.8 million, which simply reflects the value of the fully prepaid warrants at the end of the year share price. We are required to mark to market these warrants each quarter using a Black-Scholes formula, as I discussed earlier, for the potential future circumstance the cash conversion option is utilized.

Our senior debt leverage ratio defined as total term loans and average trailing 12-month revolving debt divided by trailing 12 months adjusted EBITDA improved significantly to 0.14 times at December 31, 2018 compared to 2.1 times at the end of 2017.

However, subsequent to the end of 2018, we fully repaid the revolver with operating cashflows, making us completely debt-free today, a milestone which is very meaningful to Juergen and I after more than five years of work to fix the balance sheet.

Before I turn it back over to Juergen, let me say a few words about taxes. In our financial outlook, we have assumed an effective tax rate of approximately 10% due to the expected utilization of net operating losses. If we fully utilize the remaining NOLs due to higher than expected pre-tax profits, we will experience an increase in our 2019 effective tax rate accordingly. Assuming the pre-tax income implied in our 2019 guidance, we expect to utilize all or most of the NOLs in 2019.

Now, I'll turn the call back over to Juergen for some additional comments. Juergen?

Juergen Stark -- Chief Executive Officer

Thanks, John. I'd like to discuss some of our market share dynamics in more detail, our agreement to acquire ROCCAT, and our expectations for 2019. Our record sales growth in the fourth quarter was fueled by continued strong industry growth, particularly in the console gaming market and by our continued market share gains over last year. According to NPD, our full year North American market share in 2018 increased 370 basis points to 46.1% from 42.4% in 2017.

In addition, while the gaming headset market was up 69% on a sell through basis, Turtle Beach was up 84%, again, significantly outpacing the rest of the market. And once again, we grew more sell through revenue in 2018 year over year than the next closest competitor's entire 2018 console gaming headset business.

We gained share outside of North America as well. In combined markets of UK, France, Germany, the Netherlands, and Belgium based on GFK date, console gaming headset market revenue is up 50% in 2018 while Turtle Beach was up 57% with a 42% market share. We were by far the number one console gaming headset brand in that combined UK/EU set of markets.

Looking at the same combined markets, the UK and those EU countries where we only recently launched our Atlas line of PC headsets, our share of the combined console and PC headset market was 24%, up from 21% in 2017. We were the number one brand in terms of the combined PC and console sales.

Turtle Beach was also the fastest-growing brand in PC across those combined markets. Similarly, in the US, our share of the combined console and PC headset market was 34.8%, up from 32% in 2017 and we were the number one brand.

Market share is driven by great products and a strong brand. A few highlights on our product sales in 2018 -- according to NPD in 2018, Turtle Beach had six of the top ten selling console headsets, the number one selling console headset on both Xbox One and PlayStation 4, the number one and number two selling Xbox One wireless headset and the number one selling PS4 wireless headset in North America.

We believe a number of factors helped us boost market share in 2018, including, of course, strong brand, great products, great distribution, great marketing. But we also believe that we benefited from our even stronger share in the sub-$50 segment, which is approximately 48%, given that many of the new headset users last year purchased entry level headsets.

In addition, we think we benefited from having better in stock position than some of our competitors in the spring. While it's our goal to maintain our market share, we do expect the price tier mix to shift back a bit this year and therefore are baselining a share of 44% in our forecast model, which our guidance is based on. With that, let's talk about the market in 2019.

We are very excited about the momentum we bring into the year. We entered 2019 with the best product line market share position and balance sheet than we've had in years. As we expected and have communicated on many occasions throughout 2018, we believe battle royale games like Fortnite have taken the industry to a significantly higher level than it was in 2017 by attracting millions of new gaming headset users into the market.

Per NPD, roughly 9 million console headsets were sold in 2017 in North America. We could think of this 9 million as the "core" headset market prior to the influence of the battle royale phenomenon. In 2018, again, according to NPD, this rose to 14.7 million headsets sold. We believe most of the 5.7 million-unit increase is attributable to the influx of new gamers and new headset users from battle royale games, especially Fortnite.

We have referred to this influx as a wave that we expected to crest during 2018. In fact, the wave turned out to be higher and last longer than we had estimated a year ago, but it did slow after Q2, as we expected. We've often communicated that most of the headset sales in our market in a normal year are upgrades and replacement sales and that the average replacement cycle is about 24 months with a wide distribution around that average. This is because gaming headsets are offered at various price points including at increments of around $20.00 and every step up can deliver better sound and better features.

Our console market forecasting process is much more complex than what I'm about to describe, but I'm going to provide some illustrative math as a backdrop to our 2019 market expectations. I mentioned 9 million headsets sold in North America in 2017, an incremental 5.7 million sold in 2018. If you assume half of the 5.7 million incremental headsets sold in 2018 get replaced during 2019 based on an average 24-month upgrade and replacement cycle, this would yield about 2.8 million units that you could add to the core of the 9 million units sold in 2017.

This would yield a forecast of about 11.8 million-unit sales in 2019, roughly 30% higher than the 2017 model, but roughly 20% lower than the 2018 level. This math only works if the new gamers who become headset users because of games like Fortnite continue to stay engaged and that they upgrade and replace their headsets at a roughly 24-month average rate. We've communicated our expectation that both premises will hold and we continue to expect that.

We recently, again, surveyed over 4,000 gamers and the survey results show an intent to upgrade among Fortnite players that is actually slightly higher than the 24-month historical average. The survey also indicates even those that have stopped playing Fortnite are playing other games and are gaming at similar levels of engagement as the average console gamer. Those are good indications they are here to stay.

As we expected a year ago, other video game publishers have released battle royale games which are engaging gamers. As early as the beginning of February last year, there were leaked suggesting that Red Dead Redemption 2 would have a battle royale mode, which turned out to be true and it was very popular. Grand Theft Auto Online released a battle royale mode and Battlefield V has one coming.

The monster title Call of Duty: Black Ops 4 released a battle royale mode called Blackout during the holiday season and our survey indicates that over 50% of the Black Ops 4 players are playing the Blackout mode. Most of us in the industry have been impressed by how quickly the Battle Royale franchise Apex Legends has garnered a huge player base. It reached 25 million users in just the first week after its launch early last month and climbed over 50 million as of last week.

There are several reasons why it's good for Turtle Beach that this genre of games is gaining popularity. First, these games are bringing new gamers internet of things the market and retaining the interest of existing gamers. So, the TAM should increase over time. Second, the games are a great social experience and it's essentially to have at least a basic chat headset to have a really good social experience. Finally, and most importantly, having a higher quality headset helps you do better in these games.

All three of these factors are good for the future market as a whole and for Turtle Beach as the market leader. In other words, the wave may be cresting, but the tide is staying high. So, again, while our market modeling internally is much more sophisticated than the simple math I went through, the overall dynamics provide a basis for our expectation that the console gaming headset market will be lower in 2019 but significantly higher than 2017.

Note that a faster than expected upgrade or replacement cycle by the new headset users is the largest potential driver of an increase in our market forecast. A slower rate would obviously drive a reduction.

In addition, our expectation for the 2019 headset market and particularly the fourth quarter assumes the typical every other year dynamic in terms of the strength of the holiday AAA game launches, which were very strong in 2018. The wildcard here is whether any of the AAA franchises will move to a free model like Fortnite and Apex, which could create an upside and users and budget available for headsets.

Finally, we've also assumed the modest market slowdown in the second half given rumors of potential new consoles in 2020. We may know more as the year progresses about any future console launch.

There's a good slide in our quarterly presentation that lays out the simple model I walked through and the dynamics that could impact the overall console headset market this year.

Before moving to the details of our 2019 outlook, let me talk about our exciting progress in expanding into the PC accessories market to build a $100 million business in the coming years. This afternoon, we announced a definitive agreement to acquire ROCCAT, a German and Taipei-based company with a great line of PC keyboards, mice, and headsets. I believe this is the perfect match for us and will enable us to significantly accelerate our PC market plans.

In one step, we add a strong portfolio of PC gaming keyboards and mice and we add to our recently launched portfolio of PC gaming headsets, leading to an impressive combined portfolio of 27 core models to pursue the $2.9 billion addressable market in PC gaming headsets, mice, and keyboards. And of course, that's on top of our console gaming headset business where we dominate the $1.8 billion addressable market. Note that these market sizes are from a recently updated and increased set of estimates from Newzoo.

In addition to a good product portfolio, ROCCAT has a talented and experienced team in PC accessories, from design to development to manufacturing to marketing and sales. While their largest market is Germany, where their new Vulcan keyboard and Kone AIMO mouse were best-sellers at holiday, they have a good presence in other major European PC markets, some presence in the US, and a presence in key Asian PC markets like Korea and Japan. We see the distribution footprint is highly complementary and synergistic in both directions, including giving us an opportunity to accelerate future plans in the Asian markets.

Finally, the cultural fit seems quite good. The ROCCAT team has the same focus on innovation and quality as we've always had. They had many firsts over their 11 years in business and have contributed to a variety of innovations in PC gaming keyboards and mice over the years. Personally, as you might guess from my heritage, I'm a big fan of German design and engineering. I've been very impressed by the team and thankfully, their English is much better than my German.

ROCCAT's 2018 net sales were roughly $25 million based on pro forma estimates as a stand-alone entity versus the current state, which is highly integrated with their key distribution and shareholder. Note, we are targeting revenues from ROCCAT products in 2020 at over $30 million with positive EBITDA and positive net income.

The acquisition is structured as an asset purchase and we are paying approximately 14.8 million euros in cash net of a working capital adjustment, 1 million euros in stock or cash at our option, plus up to approximately 3.4 million euros in earnout payments based on various 2019 and 2020 performance parameters. The deal is in euros, so these values are estimates based on a 1.13 exchange rate and the net working capital adjustment can also change somewhat between now and closing.

Our plan is to close the deal in the next few months and we've included $20 million to $24 million of ROCCAT's partial year net revenues into our guidance this year. While we expect that revenue to be roughly breakeven on the EBITDA line in 2019, we expect one-time costs related to the deal this year to be about $3 million and another $2 million in non-cash expenses like amortization that are included in our GAAP net income guidance for 2019.

We will be integrating the ROCCAT team and beginning work on a combined PC portfolio as well as an integrated brand and marketing strategy with the target of having those in place next year well in time for the 2020 holiday season -- very exciting.

As I mentioned, this deal significantly accelerates our plans and growth potential in the large PC peripherals market. You'll recall we launched a new line of PC gaming headsets in October. We achieved the retail placements we targeted and slightly beat our internal revenue plan for PC headsets in 2018. So, we're off to a good start there. Once we have a consolidated branded portfolio of keyboards and mice, we have an opportunity to present a full lineup at retail, which we expect will benefit PC gaming headset sales.

Before deciding on the ROCCAT deal, we also looked at how our brand plays into the PC gaming keyboard and mouse segments. We believe we have a good opportunity to leverage the strong brand we have among gamers from our position as the leader by far in the console headset category.

In Newzoo's peripheral brand tracker, a consumer insight survey, we looked at our core US and European markets to measure purchase funnel scores. Purchase funnel asks consumers to rate awareness, they know the brand, consideration, they would consider buying, and preference, they pick one brand as the preferred. The market survey shows we have high awareness and purchase consideration for PC headsets and more importantly, we are tied for second in purchase preference in the combined core US/EU markets and number one in purchase preference in the US.

For PC keyboards and mice, where we don't play today, we have an advantage among the large install base of existing Turtle Beach headset users in our core markets, where we are tied for first in purchase consideration for mice and tied for second in keyboards.

This indicates to us that our brand creates loyalty based on a long history of providing high-quality innovative headsets, which spills over into mice and keyboards. Our goal with PC headsets and the products and capabilities and distribution ROCCAT brings is to build a $100 million business in the coming years.

Now, moving to our outlook for Turtle Beach in 2019 -- for purposes of our outlook discussion, we're going to assume that we close the ROCCAT acquisition around May 1 and that it delivers about $20 million to $24 million in partial year net revenue this year. We are not going to be breaking out details of ROCCAT every quarter as though it were a separate business because it's not going to be managed that way. We see ROCCAT as one part of a growing integrated set of PC gaming accessories.

For the full year 2019, we expect total net revenue to be in the range of $240 million to $248 million. This is based on the market dynamics and assumptions I laid out earlier with the partial year ROCCAT revenue's estimates folded in. Gross margin in 2019 is expected to be in the 33% to 34% range compared to about 38% last year and about 34% in 2017.

The slight decrease in gross margin reflects somewhat lower fixed cost leverage, one-time purchase accounting related impacts from the ROCCAT acquisition and greater promotional allowances, which were lower than normal in 2018 given the rapid market growth and short supplies.

We expect operating expenses to increase $11 million to $13 million in total. This reflects roughly flat opex related to console headsets and increased spending related to ROCCAT. Spending related to growth initiatives, which include marketing costs for Turtle Beach PC headsets as well as the operating expenses for ROCCAT are estimated to be $10 million to $12 million. In addition, the company expects one-time transaction and integrated costs associated with the ROCCAT acquisitions of about $3 million in 2019.

We look at these sums as the investments that will help us drive long-term growth. As a result, we expect adjusted EBITDA to be in the range of $27 million to $31 million. GAAP earnings per diluted share are expected to be between $0.70 and $0.90. Adjusted earnings per diluted share in 2019 are expected to range between $0.90 and $1.10. This adjusted EPS outlook excludes the transaction costs related to the acquisition of ROCCAT and excludes the impact of marking the market warrants, as John explained earlier.

Net income and EPS outlook, as John mentioned, assume an effective tax rate of 10%. Looking at the first quarter of 2019, we expect net revenues to be approximately $42 million. We expect first quarter gross margins of around 32%, reflecting somewhat higher promotional spend last year, including for an upcoming new product launch replacing one of our main product models.

We expect adjusted EBITDA for the first quarter of 2019 to be about $3 million. The reduction in adjusted EBTIDA compared to last year is a function of higher promotion allowances and increased marketing spend to support our retail momentum, including that upcoming product launch.

We expect GAAP EPS in the first quarter to be about $0.02 per share. Again, this outlook excludes the impact of the warrant mark to market. Adjusted EPS in the first quarter is expected to be $0.05, excluding approximately $0.6 million in transaction costs related to the acquisition of ROCCAT.

We do expect the phasing of quarterly revenues to be similar to 2016, but somewhat more frontloaded given the momentum from the strong recent holiday launches flowing through to Q1 and the assumptions I described with the every other year strength of the AAA launches on Q3 and Q4 this year. Where first half revenues were just over 30% of the year in 2016, we expect first half revenues to be about 35% this year. Accordingly, we expect second half revenues to be about 65% of the year with Q4 in the low 40%s versus high 40%s in 2016.

Lastly, let me reiterate our goals for 2019. Number one, continue to dominate our core console headset market. We have more great products coming this year and we will continue to focus on our brand, distribution, merchandising, and all of the operational capabilities that make us the leader in our segment.

Number two, invest to drive future growth, specifically in PC gaming headsets and now mice and keyboards. This goal is helped and accelerated by ROCCAT, as I've covered in detail. Three, drive our presence in the burgeoning e-sports and VR markets. We'll continue to leverage our position as a key arms dealer to e-sports teams and pro players everywhere as we have been. We're keeping an eye on VR gaming, which we continue to believe has tremendous potential as a gaming platform in the future.

Financially, our goals are to drive double-digit revenue growth, maintain gross margins in the mid-30s, diligently manage opex but with sufficient investments to drive growth, and generate flow through to EBITDA so that EBITDA growth outpaces revenue growth.

In summary, I want to, again, thank our terrific employees for a fantastic job in 2018. We're very excited about 2019, both because of the great position we have in our core console headset market and the growth opportunities before us in the PC accessories market.

Operator, we are now ready to take questions.

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, if you have a question at this time, just press * and 1 from your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, press the # key. Again, if you have a question, just press * and 1. One moment...

Our first question comes from Mark Argento with Lake Street Capital. Your line is open.

John -- Lake Street Capital -- Analyst

Hey, guys. This is John on for Mark. I appreciate you taking my questions and congrats on the year. The first one from me, I just want a little bit more color on the opex plans for this year. If you could kind of drill into where you think you can find the most leverage as far as the growth spend in the PC business. Thank you.

Juergen Stark -- Chief Executive Officer

Sure. So, as we mentioned, opex, we expect to be $11 million to $13 million higher than 2018. That includes about $9 million from ROCCAT plus the $3 million roughly of transaction expenses.

The opex, by the way, on the Turtle Beach side is roughly flattish with sales and G&A going down somewhat, but marketing and R&D going up somewhat year over year. Then the ROCCAT opex that is a partial year, obviously, adding that based on a May 1 closing, more than half of that opex is in marketing and R&D, which we view as very good because that obviously drives product innovation and growth in the future.

John -- Lake Street Capital -- Analyst

Got it. I know you guys touched on it a little bit, but any more potential color on ROCCAT's product mix and geographic mix and your thoughts on being able to leverage that into greater international sales going forward.

Juergen Stark -- Chief Executive Officer

Yeah. Sure. There's a good page in the investor document that shows the product portfolio of both companies in the PC category. I'll just reiterate a couple of things -- they've got about nine core mouse models, eight keyboards, and five headsets. You add to that our five headsets and you end up with 27 core models of mice, keyboards, and PC gaming headsets to go after that whole TAM, $2.9 billion TAM.

So, that's opportunity number one and we can, first of all, drive sales synergies there. We're very strong in the US and the UK and obviously in Europe. Their strength is in Germany, although they're represented in the other regions.

So, right out of the gate, we will look at ways to leverage the distribution in our core markets and then very interestingly, they have over 10% of their revenues right now in Asia with some products that are well-liked in some of the core countries like Korea and Japan, which for us has become a higher priority than China because of various market dynamics. So, the future opportunity is to leverage the fact that they've got account managers and distribution in those markets to actually help drive the TB side of the product portfolio.

And then lastly, as I mentioned, one of our priorities is not to disrupt the business but drive synergies, obviously, out of the gate. We will look to have a combined integrated portfolio, brand merchandising, all of that without forcing that in immediately. We look to have that completed during 2020 and in place well in time for 2020 holidays.

John -- Lake Street Capital -- Analyst

Got it. Finally, just maybe some more thoughts on how you're approaching e-sports during the year and your outlook on that market and is there going to be more attention or investment paid now that you're starting to make a bigger push into the PC market? Thank you.

Juergen Stark -- Chief Executive Officer

Sure. So, three things -- so, e-sports, it's all about marketing and brand marketing. As I said before, the market to sell the professional is very, very small. That's not why you do it. We have an approach that's worked very well for us to focus on quality, not quantity of teams we work with. So, we've picked some of the best. Obviously, throwing ROCCAT into the mix, we will leverage our e-sports partnerships across their products as well. So, we think that will be quite positive.

One other interesting e-sports note is Rene Korte, the CEO of ROCCAT, was himself a professional gamer for many, many years. So, in addition to running the company for the last 11 years, he brings a very good skillset to the company and we're looking forward to having him on the team.

John -- Lake Street Capital -- Analyst

Awesome. Thank you, guys and congrats.

Operator

Thank you. Our next question comes from Nehal Chokshi with Maxim Group. Your line is open.

Nehal Chokshi -- Maxim Group -- Managing Director

Thank you. This looks like a very exciting acquisition. Congratulations. When did you guys start working on it?

Juergen Stark -- Chief Executive Officer

We started working on it in earnest in Q3 of last year. Once we recognized last year, probably around late Q2, that we're going to have an ability to start making some investments, all of the focus and attention that John and I have spent on kind of fixing the balance sheet got shifted into how we use that bandwidth to start looking at ways to accelerate our growth. We actually started looking at other potential acquisitions even during Q2 last year.

We've had an ongoing engagement with Wedbush, as we noted in the release on ROCCAT, to look at companies. Many of them didn't fit. We turned down a lot of opportunities. But ROCCAT ended up being a great opportunity, a perfect match for us. Then of course, once we determined that, which was later last year, it takes quite a while to get an agreement signed and figure out exactly how you're going to do everything.

Nehal Chokshi -- Maxim Group -- Managing Director

Great. What is the IP that ROCCAT has, especially on keyboards and mice?

Juergen Stark -- Chief Executive Officer

Good question. Don't quote me on the numbers, but they have around 20 core patents in PC keyboards and mice. That's, at least, my latest understanding. We're still working on getting their exact portfolio in which ones we would kind of count in the way we count patents because some of those may be designed patents.

Maybe more interestingly, they have been a key participant -- Rene himself, the CEO -- in driving a lot of the innovations in the years in PC gaming, everything from the design of mechanical switches and keyboards to how the mouse sensors work. They have a design shop and a clay and modeling shop in Germany.

That's a set of skills that not only gives us a portfolio, but gives us a very, very good capability to continue to drive innovation because the ROCCAT team know exactly what keyboard needs are and what mouse needs are and have been participating with a lot of the unique innovations over the years. Lighting as well, by the way. They have an integrated lighting platform that goes along the mice keyboards and headsets and software to control all of that.

All of these things, by the way, part of the reason we're doing the deal is if we had to build that organically, find the skills, all of that, it's probably, I would guess, a two-plus year acceleration in our ability to get into PC keyboards and mice. I mentioned, by the way, maybe last point, when I've been asked this question in the past, "Do you need to be in keyboards and mice?" No. But it provides two big advantages.

The first one is you can show a combined integrated full portfolio at retail. So, instead of having a couple of PC headsets, you have an opportunity, at least -- of course, you have to convince retailers to do this with you -- to have a bay that features your headsets, keyboards, and mice. That gives you a retail shelf space advantage. Then the second thing is PC software, which can integrate the capabilities across keyboards, mice, and headsets like lighting. So, ROCCAT, as I mentioned, accelerates our plans in that regard by several years.

Nehal Chokshi -- Maxim Group -- Managing Director

Great. Then my last question and then I'll get in the queue would be that your March Q revenue guidance implies it will be down 62% Q over Q versus if you include March '18, which clearly there was something -- you had the whole battle royale phenomenon becoming en vogue there -- but on average, it looks like between 72%-83% Q over Q decline. So, this appears to be much better than typical seasonality. What is behind that?

Juergen Stark -- Chief Executive Officer

Nehal, I'm not following your numbers, exactly. So, let me just reiterate. Q1 net revenue guidance is around $42 million. So, that's roughly even with 2018, in fact, up slightly. The dynamic last year that's important to note when you look at -- as we laid out some of the percentages, first half, second half, it will give you guys an opportunity to roughly lay out the quarterly revenue phasing.

The important note is that Q1, the Fortnite effect was starting to hit in earnest in February. So, Q1 was very high last year. Q1 this year is quite high as well because of a really strong slate of game launches in Q4, which tends to always spill over into Q1. Q2 last year was stunningly high because that, we would say, was the peak of the Fortnite, new gamers, new headset users coming in and there were some shortages that we had on sell-in that we had to make up for in Q2. So, Q2 had kind of a double-whammy on the positive side last year.

The last thing I'll mention on revenues is channel retailers carry a set number of weeks of supply. So, when the market grows, you get a double benefit because you not only have to fulfill the higher sell-through, but the channel inventory amount goes up as the market increases. As the market slows down, then you have the opposite effect. You have less sell through that you're fulfilling, but your channel inventory level also comes down somewhat.

So, when you look at our overall 2019 guidance like with the simplified model I went through explains sell through and of course, it actually ties quite well with our revenue guidance, but you have to then take into consideration the channel fill effect.

Nehal Chokshi -- Maxim Group -- Managing Director

Very good. Thank you.

Operator

Thank you. Ladies and gentlemen, as a reminder, to get in the queue, just press * and 1. Our next question is from Elliott Alper with D.A. Davidson. Please proceed.

Elliott Alper -- D.A. Davidson & Company -- Analyst

Great. Thanks for taking my question. You laid out the math for your 2019 guidance and it sounded like there's nothing in there for completely new users. Is it fair to say your guidance does not currently assume any new gamers added in 2019? You mentioned the onslaught of players downloading Apex Legends. Are you seeing that affect headset demand for new gamers? Thank you.

Juergen Stark -- Chief Executive Officer

Sure. So, two things -- we are definitely not implying that there are no new gamers coming in in 2019. That's under what I said a couple of times, which is the real market dynamics and the way we forecast everything is much more sophisticated than the simple model I went through. It would take an hour by itself to explain all the dynamics.

So, the rough math works well as an overall kind of illustrative example, but in reality, every year the market is made up replacement upgrading, which drives the vast majority and some new entrants, which we expect this year, and also some exits during the year as people get older, go to college, stop gaming, whatever. So, that's number one.

Then Apex -- yeah, we're very excited about Apex for two reasons. One, it's a really engaging, great game that is keeping the headset users engaged, very consistent with what we expected. We think there will be more things like that coming. It doesn't necessarily drive additional sales of gaming sets because if a Fortnite player moves over and plays Apex, there's a very high probability, 80%+ from our survey data, that they have a headset already.

So, the unusual effect last year is the millions of new gamers that came in were gamers that weren't headset users starting to use headsets, right? So, even as you have great new games coming, what that does is keep everybody engaged. That's important.

The second thing we love about Apex is it's a great game that is following in Fortnite's footsteps in terms of the free model. So, you get the game for free and they make money while you're playing the game. That's in counter to some of the large AAA titles where you have to shell out $50-$60 to get the game. What that does is free up budget to replace, upgrade headsets.

To the extent I mentioned, like Q4, normally this year would be a weaker slate of games. That's built into the market guidance. There's normally an every other year kind of dynamic here. We're in the other one of those this year, but the wildcard, as I mentioned, is if any of the other AAA major games decide to follow suit -- because Apex has obviously been very successful -- in a free model, that could create some upside.

One last comment about this year -- coming off of last year, it is not all that easy to figure out what this year is going to look like. That's one of the reasons we went through the simple model. I did indicate that the replacement rate is a really important driver of the market this year. If you assume that the average drops a lot from a 24-month average, that would have a positive impact. If you assume that the upgrade replacement cycle is slower, of course, it would have the opposite effect. That's going to be an important dynamic to where, in our opinion, to where the market comes out this year.

Elliott Alper -- D.A. Davidson & Company -- Analyst

Great. Thank you.

Operator

Thank you. Ladies and gentlemen, next question is from Nehal Chokshi from Maxim Group. Please go ahead.

Nehal Chokshi -- Maxim Group -- Managing Director

Thanks. Based on the parameters that you talked about for ROCCAT, I think you said initially, it will be gross margin diluted overall to corporate average, plus you were citing overall about $12 million of opex. It sounds like at least in calendar '19 this will be about $5 million dilutive to non-GAAP net income. Is that about right?

Juergen Stark -- Chief Executive Officer

I'd have to double-check the $5 million, but there's about $3 million of transaction expenses. There's about $2 million of non-cash opex, depreciation, amortization, stock comp, all of that. So, I think your $5 is correct. And on the margin point, the way we're doing the deal as an asset purchase, we buy their inventory, all that. There's a lot of inventory valuation dynamics that are included in an acquisition that are one-time effects.

So, I believe our forecasting on the ROCCAT revenues has gross margins that are around 20% because of all of those effects, where our ongoing outlook for ROCCAT, once you've passed all of that acquisition purchase stuff is very comparable to our historic mid-30s kind of rate.

Nehal Chokshi -- Maxim Group -- Managing Director

Why will there be the delta between the acquired acquisition and once you flush through the acquired acquisition?

John Hanson -- Chief Financial Officer

Yeah. This is John. It's primarily purchase accounting treatment of the beginning inventory balances. So, until the inventory that comes with the acquisition is pushed through the business and we have new inventory and new cost, the margins will be lower in our go forward.

Juergen Stark -- Chief Executive Officer

Very typical of a purchase like this, by the way.

Nehal Chokshi -- Maxim Group -- Managing Director

Okay.

Juergen Stark -- Chief Executive Officer

But no long-term impact. It's an acquisition artifact, essentially.

Nehal Chokshi -- Maxim Group -- Managing Director

Got it. Thank you.

Operator

Thank you. At this time, this concludes our Q&A session. I would now like to turn the call back to Mr. Stark for closing remarks.

Juergen Stark -- Chief Executive Officer

Thank you very much. So, as I mentioned, we're very excited about the year. the acquisition is going to be terrific. I'm really looking forward to having the ROCCAT team as part of our group on our next earnings call. So, we look forward to speaking with our investors and analysts when we report our first quarter results in May. Thank you very much.

Operator

Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Duration: 58 minutes

Call participants:

Juergen Stark -- Chief Executive Officer

John Hanson -- Chief Financial Officer

John -- Lake Street Capital -- Analyst

Nehal Chokshi -- Maxim Group -- Managing Director

Elliott Alper -- D.A. Davidson & Company -- Analyst

More HEAR analysis

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

10 stocks we like better than Turtle BeachWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Turtle Beach wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of March 1, 2019

Better Buy: Shopify vs. Zendesk

You want amazing returns? Few investors have experienced a two-year run on par with those holding shares of e-commerce platform Shopify (NYSE:SHOP) and/or customer-service software provider Zendesk (NYSE:ZEN). Both companies have tripled in value over that time frame.

A huge factor in that growth is the power of the software-as-a-service (SaaS) model being adopted by these two companies. It's a trend that is only becoming more prevalent as time goes on.

A businessman's hand pushing a cloud icon on a screen

Image source: Getty Images.

Between the two, which is a better buy today? We can't know that answer with 100% certainty. But by comparing the companies on three different dynamics, we can get a better idea for which we'd feel more comfortable putting our money behind.

Financial fortitude

When evaluating financial fortitude, what I'm really wondering is this: Which of these two companies would fare better if an economic crisis hit today?

I'm not just talking about surviving -- I'm talking about actually getting stronger. While the stock price might suffer, a company with lots of cash and little debt can capture long-term market share as weaker players bow out during a recession.

Keeping in mind that Shopify is valued at two-and-a-half times the size of Zendesk, here's how the two stack up.

Company Cash Debt Free Cash Flow
Shopify  $2,000 million $0 ($19 million)
Zendesk $821 million $458 million $43 million

Data source: Yahoo! Finance. Cash includes long- and short-term investments. Free cash flow presented on trailing-12-month basis.

Both of these companies have strong balance sheets, but I'm going to side with Shopify. Here's why: The company's negative free cash flow is almost entirely by design -- it doesn't want to hit the brakes on reinvestment too early. There's tons of market share to gain. If an economic crisis hit, Shopify could tap the spending brakes and be cash flow positive if it wanted to.

Thus, the fact that Shopify has a net cash position of $2 billion, versus Zendesk's $360 million, gives it the edge here.

Winner = Shopify

Valuation

Next, we have valuation. This is part art, part science. But as you'll see below, both of these stocks can be summed up in one word: expensive.

Company P/E P/FCF P/S PEG Ratio
Shopify 564 N/A 20.9 8.0
Zendesk 335 202 14.6 5.4

Data source: Yahoo! Finance, E*Trade. P/E calculated using non-GAAP earnings.

Anyone who has a value-investing bone in their body would likely faint from such numbers. It is very rare to find companies trading for 300 to 500 times earnings. 

This, however, is also by design. Both of these companies have wide moats (more on that below) from high switching costs. The recurring revenue that they take in is very reliable and unlikely to disappear. In fact, spending per customer usually grows over time. 

That assurance encourages management teams to invest in long-term growth and profitability at the expense of short-term concerns. Therefore, earnings are sparse, for now.

Both stocks are expensive, but Zendesk is technically "cheaper."

Winner = Zendesk

Sustainable competitive advantages

Finally, we have to evaluate the most important factor: a company's sustainable competitive advantages -- or its moat. Both of these companies benefit from a primary moat of high switching costs.

If an e-commerce start-up (and that's what almost every start-up in retail is these days) wants a platform to operate on, Shopify is the go-to choice. Once everything is up and running  -- a website, payment solution, order tracking, analytics, etc. -- a vendor would be loath to switch to a different platform. Doing so would incur both financial and emotional costs.

The same is true for Zendesk. Most customers get started with Zendesk Support, but then add on other tools over time -- like Chat, Talk, Guide, and Support. This is evidenced by the company's dollar-based net expansion rate of 119%. In essence, this means Zendesk customers are not only sticking with the company but spending 19% more every year. 

But the differentiator here is the fact that Shopify has a second powerful moat starting to form around it: network effects. As I recently covered in an article on the topic:

Shopify now has around 2,200 apps available in its app store. It only keeps a 20% cut of sales of those apps -- not a huge needle mover. But that's not the point: They make the platform more valuable -- and Shopify doesn't have to do much of anything.

Shopify currently has over 800,000 merchants on its platform. That means more third-party app developers will build up Shopify's base. That, of course, will only draw in more merchants. That provides a solid second moat for Shopify, and gives it the edge here.

Winner = Shopify

And my winner is...

So there you have it: Shopify is my winner. But don't shy away from Zendesk, either. I own both stocks in my own portfolio -- and they comprise 10% of my real-life holdings. I think both are worthy of your consideration. If you have to choose one to start with, though, make it Shopify.

Piramal Enterprises gains after launching injection in US market

Shares of Piramal Enterprises rose 1.5 percent in the early trade on Tuesday after it launched an injection in the US market.

Piramal Critical Care, a business unit of Piramal Enterprises launched Mitigo (Morphine Sulfate Injection, USP – Preservative-free) in 10 mg/mL and 25 mg/mL concentrations in the US market.

Piramal Critical Care is a global leader in anesthesia, pain management, and intrathecal therapy.

Piramal Critical Care will continue to work with wholesalers, hospitals, interventional pain doctors, and pain management centers across the country to ensure availability of MITIGO for patients with intractable chronic pain, company said in release.

Peter DeYoung, Chief Executive Officer, Piramal Critical Care said, "We are pleased to support intrathecal therapy for pain management with FDA approval and our launch of MITIGO. We continue to expand our leadership in intrathecal therapy through this launch, as well as in inhaled anesthesia and the injectable anesthesia and pain management drugs that we acquired from Janssen."

At 09:26 hrs Piramal Enterprises was quoting at Rs 2,691.40, up Rs 34.60, or 1.30 percent on the BSE.

For more market news, click here First Published on Mar 12, 2019 09:29 am

Chevron CEO: If Green New Deal leads to an 'honest' dialogue that's a good thing

Chevron Chairman and CEO Michael Wirth said he's open to New York Rep. Alexandria Ocasio-Cortez's Green New Deal as a conversation starter about how oil and gas companies should best reduce their impact on the environment while providing reliable energy.

The freshman congresswoman's sweeping proposal is "an attempt to try and have a different conversation," Wirth told CNBC's Brian Sullivan from CERAWeek on Tuesday. "And if that leads to an honest conversation about how we balance energy supply for a growing world, economic development and the environment, I think that's a good conversation to have."

Ocasio-Cortez's ambitious proposal includes generating 100 percent of the nation's power from renewable sources, making all buildings energy efficient and eliminating carbon dioxide and other greenhouse gas emissions from the transportation sector within about 10 years.

Energy thought leaders at the CERAWeek energy conference this week in Houston are largely dismissing Ocasio-Cortez's Green New Deal as unrealistic and politically divisive. Instead, the discussions have largely focused on the kind of bottom-up, market-oriented solutions that the self-described democratic socialist dismisses as too conservative.

Wirth's concerns centered around the world's growing population, which is expected to reach 8.5 billion by 2030, and whether there will be enough reliable energy for that many people.

"There are seven and a half billion people on the planet today, a billion of whom don't have electricity," he said. "We need reliable, affordable and ever cleaner energy to support a growing population."

Last week, Exxon Mobil and Chevron said they would boost their shale oil productionin the Permian Basin substantially, with the latter expected to more than double its output to 900,000 barrels a day in four years.

— CNBC's Tom DiChristopher contributed to this report.

Alibaba News: BABA Stock Higher on Stake in Chinese Courier

Alibaba news concerning the company’s new investment in a Chinese courier has BABA stock up on Monday.

3 Reasons to Buy Alibaba Stock Right Now3 Reasons to Buy Alibaba Stock Right Now Source: Shutterstock

Alibaba (NYSE:BABA) is making a $693 million investment in the Chinese courier company STO Express Co Ltd. This will actually have BABA investing in a new subsidiary of the shipping company.

This new subsidiary of STO Express will hold a 29.9% stake in the company. The Alibaba news about its investment in the company is that it is taking out a 49% stake in this subsidiary. This will in turn give it a 14% stake in the parent company.

The Alibaba news concerning its investment into STO Express marks the fourth time that the company has made a major investment in a Chinese courier company. BABA is making these investments as part of its efforts to speed up deliveries in the country.

“We will deepen our existing collaboration with STO in technology, last-mile delivery across China and New Retail logistics,” Alibaba said in a statement to Reuters.”This investment is a step forward in our pursuit of the goal of 24-hour-delivery anywhere in China and 72 hours globally.”

Deyin Investment will continue to remain the main shareholder in STO Express even after the Alibaba investment. It will own the remaining stake in the subsidiary, a direct 7.76% stake in the company, as well as the entirety of a stake in a second subsidiary worth 16.10%.

BABA stock was up 3% as of Monday afternoon and is up 28% since the start of the year.

As of this writing, William White did not hold a position in any of the aforementioned securities.

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Syros Pharmaceuticals Inc (SYRS) Expected to Post Quarterly Sales of $400,000.00

Wall Street analysts forecast that Syros Pharmaceuticals Inc (NASDAQ:SYRS) will report sales of $400,000.00 for the current fiscal quarter, Zacks reports. Five analysts have provided estimates for Syros Pharmaceuticals’ earnings. The lowest sales estimate is $400,000.00 and the highest is $410,000.00. The firm is expected to report its next earnings results before the market opens on Thursday, March 7th.

On average, analysts expect that Syros Pharmaceuticals will report full-year sales of $1.57 million for the current fiscal year, with estimates ranging from $1.56 million to $1.60 million. For the next financial year, analysts forecast that the firm will post sales of $1.76 million, with estimates ranging from $1.60 million to $2.30 million. Zacks Investment Research’s sales averages are an average based on a survey of research analysts that that provide coverage for Syros Pharmaceuticals.

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SYRS has been the topic of a number of recent research reports. Roth Capital set a $14.00 price target on shares of Syros Pharmaceuticals and gave the company a “buy” rating in a research note on Sunday, December 2nd. Oppenheimer set a $26.00 price objective on shares of Syros Pharmaceuticals and gave the company a “buy” rating in a research report on Tuesday, November 13th. ValuEngine cut shares of Syros Pharmaceuticals from a “buy” rating to a “hold” rating in a research report on Wednesday, January 2nd. BidaskClub upgraded shares of Syros Pharmaceuticals from a “sell” rating to a “hold” rating in a research report on Tuesday, December 11th. Finally, Wedbush reiterated an “outperform” rating and set a $13.00 price objective on shares of Syros Pharmaceuticals in a research report on Monday, December 3rd. One analyst has rated the stock with a sell rating, three have assigned a hold rating and six have assigned a buy rating to the company. The company currently has an average rating of “Buy” and a consensus target price of $17.43.

NASDAQ:SYRS traded down $0.17 during trading hours on Monday, hitting $6.90. 115,909 shares of the stock traded hands, compared to its average volume of 124,286. Syros Pharmaceuticals has a 1 year low of $5.17 and a 1 year high of $13.86. The company has a market capitalization of $230.50 million, a P/E ratio of -3.24 and a beta of 1.14.

Large investors have recently added to or reduced their stakes in the stock. Bank of America Corp DE lifted its position in shares of Syros Pharmaceuticals by 205.9% during the fourth quarter. Bank of America Corp DE now owns 17,400 shares of the company’s stock valued at $98,000 after buying an additional 11,711 shares during the last quarter. Rhumbline Advisers lifted its position in shares of Syros Pharmaceuticals by 51.4% during the fourth quarter. Rhumbline Advisers now owns 32,406 shares of the company’s stock valued at $181,000 after buying an additional 10,995 shares during the last quarter. MetLife Investment Advisors LLC lifted its position in shares of Syros Pharmaceuticals by 55.2% during the third quarter. MetLife Investment Advisors LLC now owns 20,338 shares of the company’s stock valued at $242,000 after buying an additional 7,230 shares during the last quarter. Alps Advisors Inc. lifted its position in shares of Syros Pharmaceuticals by 30.6% during the fourth quarter. Alps Advisors Inc. now owns 77,768 shares of the company’s stock valued at $433,000 after buying an additional 18,215 shares during the last quarter. Finally, Bank of New York Mellon Corp lifted its position in shares of Syros Pharmaceuticals by 8.9% during the fourth quarter. Bank of New York Mellon Corp now owns 84,537 shares of the company’s stock valued at $470,000 after buying an additional 6,883 shares during the last quarter. 63.47% of the stock is owned by institutional investors.

Syros Pharmaceuticals Company Profile

Syros Pharmaceuticals, Inc, a biopharmaceutical company, focuses on the development of treatment for cancer and monogenic diseases, and building a pipeline of gene control medicines. Its lead product candidates include SY-1425, a selective retinoic acid receptor alpha agonist, which is in a Phase II clinical trial for genomically defined subsets of patients with acute myeloid leukemia (AML) and myelodysplastic syndrome; and SY-1365, a selective CDK7 inhibitor, which is in a Phase I clinical trial that is used for treating patients with solid tumors and blood cancers, including ovarian cancer, breast cancer, and AML.

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Earnings History and Estimates for Syros Pharmaceuticals (NASDAQ:SYRS)