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UPDATE: Bank Of America Reiterates On Tessera Technologies Following Strong F2Q14 Results

Dwight Einhorn

In a report published Tuesday, Bank of America analyst Krish Sankar reiterated a Buy rating on Tessera Technologies (NASDAQ: TSRA), and raised the price target from $28.00 to $33.00.

In the report, Bank of America noted, “TSRA reported June quarter (F2Q14) revenue/non-GAAP EPS of $37M/$0.19higher than our estimate of $32M/$0.05 with the earnings upside primarily driven by top-line and good expense control. Recurring revenues were about $35.8M in the June quarter (our estimate $32M) and episodic revenues were $1.4M. We had no episodic revenues in our June forecast.

"The episodic revenues (non-recurring revs, back payments, etc) are difficult to forecast. The September quarter revenue guidance of $92-$94M was above our forecast of $82M (including episodic revenues of $50M). More importantly, the recurring revenue outlook for FY14 was raised to $140M (from $120M) and FY15 was increased to $195M (from $150M) as the recent agreement with Micron gets rolled into the forecast.The earnings power based on the recurring revenue basis alone could be close to $1.00 next year. We reiterate Buy rating as we believe TSRA's products are well-positioned and the restructuring story is shaping up well.”

Tessera Technologies closed on Monday at $25.65.

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