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  • investora2z investora2z Jul 28, 2013 12:21 PM Flag

    Earnings will be the next trigger

    The earnings are going to be released on July 30. That will be the immediate trigger for the stock. 2013 has been great for the stock as it has appreciated by more than 90% on a year to date basis. On a 52 week basis, it is up by more than 45%. the strength is backed by fundamentals as the recent quarter's performance was very good. The revenues and the net income had grown by 40% and 80% respectively. Consequently, the margins had also expanded. Even over the years, there has been exponential growth in revenues and net income. The company has no debt, and had $280 million cash on March 31. Analysts have different opinion, with Barclays increasing their PT from $17 to $18 and JPMorgan Chase downgrading the stock with a price target of $16.00. The stock is trading at 22 times trailing earnings and the forward P/E is 17. Thus it is important that the fundamental growth story continues in the future quarters so that the valuations remain reasonable. An article on seekingalpha had recommended RPXC. The business model of RPXC was praised, and the author was bullish as the earnings visibility is very good. RPXC helps the companies avoid costs by mitigating patent litigation. Litigation has recently helped companies in successfully forcing defendants to settle, but sometimes one has to go through the legal process which is time consuming and costly. Blue Calypso (BCYP), which has filed a patent infringement lawsuit against several big companies, was recently successful in getting one defendant to settle. RPXC is a first mover in the specific segment, and has been able to leverage that to its advantage. Still, for the immediate uptrend to continue, it is important that the company reports good numbers. After such a huge rise, slippages can lead to corrections. A good performance can strengthen the uptrend. The risk of exposure to earnings is always high, so one can play as per the risk appetite.

 
RPXC
16.75-0.27(-1.59%)Jul 2 4:00 PMEDT