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InterDigital, Inc. Message Board

  • investora2z investora2z Apr 19, 2013 1:54 PM Flag

    Earnings will be the next trigger

    Though there have been some downgrades recently (William Blair downgrading IDCC from outperform to a market perform), the stock is still up by more than 27% on a 52 week basis. It had more than doubled from its low in June ($22.37) to nearly $49 about 6-7 weeks back. Since then it has corrected by around 20% but seems to be finding support at $40. Presently it is trading below the 50 DMA ($45.55) and 200 DMA ($42.59). The volumes have been tepid and some force is required to take it over the short term averages. The stock has a P/E of around 6.5 and the market cap to sales is around 2.5. The price target of the analyst is in the range of $47-48 which indicates a decent upside from the current levels. In 2012 the revenues were $663 million ($301 million in 2011) and the net income was $271 million ($89 million in 2011). Last quarter, however, the net income had fallen by 32%. The debt / equity ratio is a little high at 39 but cash on books was around $577 million (cash per share of $14) on 31st December. The fortunes of the stock were changed after its success in monetization of its patents by sale to Intel (INTC). Such stories have inspired several companies to pursue lawsuits for infringement of their patents. There are pure patent plays, and also companies which have an existing business and also have lawsuits going for patent monetization. e.g. Document Security System (NYSE:DSS) has a good business and also owns patents worth $245 million. Its subsidiary filed a lawsuit against Facebook (FB), LinkedIn (LNKD), Novell (NOVL), Broadvision (BVSN) and Jive Software (JIVE) which is potentially worth hundreds of millions. Market analysts in the IP business like JP Moreno favor balanced business models like DSS which have lesser risk for investors. For IDCC, the upcoming earnings should provide the next trigger.

59.07+0.23(+0.39%)Jul 27 4:00 PMEDT