The stock has recovered from the lows made after the post-earnings crash in April. It had crashed from ~$29 to ~$21 within one day, but has rebounded by around 25% after that. However, it is not able to gain enough strength to reach recent highs. The Q1'13 earnings were not very good, and the sentiments have not improved too much after that. Further, the high price to sales and low profit margins make it appear a little expensive. The P/E remains stretched at around 82, but the forward P/E of 8.28 and PEG of around 0.5 indicate expectations of better fundamental performance over the next few quarters. The zero debt company has more than $327 million in cash, and hence there is nothing much to worry on liquidity or leverage front. Acacia owns several revenue generating patents through its subsidiaries, which makes the business model much better than several other companies in other segments of the IPR business. Some small companies like PLC Systems (PLCSF) (a medical device company) attempt to optimize the value of patents related to single technology they possess, while some other companies aim to build a diversified portfolio. PLCSF has recently got several patents for its only product RenalGuard. Recently, many companies have started acquiring patents which provide a steady flow of licensing revenue rather than going for patents which hold one time monetizing potential alone. This is because, a steady stream is required to balance and stabilize the business model. The growth in market will definitely help Acacia, but it may face more competition going ahead. TheStreet downgraded it from buy to hold, but was confident of its liquidity position. The reason for the downgrade was perhaps the dip in the last quarter's performance. It is down by 27% on a 52 week basis. Earnings will be the next major trigger for the stock, but there can be some other news flow which can provide a push on either side.
The Q1'13 earnings were not very good , investora2z your statement pertaining to Q1 earning is not accurate even though reaction of stock after seems to validate your comments. Q1 2012 earning was a one off you can not compare that quarter to any for many reasons , #1 Acacia laid out about 150 millions in that quarter to buy a portfolio of patents ; in that same quarter without both litigation or having to share with a inventor / patent holder Acacia was able to license about 65 million on that one portfolio which represented 65% of Q1 Rev. Q1 2013 was a excellent quarter based on both street expectations both top & bottom line. Shorts bear raided this stock in a manner we have unfortunately seen before. Share price at current level represents excellent value do not understand this comment you made, "The P/E remains stretched at around 82 " please explain.