Analysts have raised their price target for InterDigital by $5 to $328.75, citing an improved revenue growth outlook, higher profit margin forecasts, and recent licensing agreements with major smartphone vendors.
Analyst Commentary
Recent research updates have highlighted both optimism and caution regarding InterDigital's prospects, following new licensing agreements and raised financial forecasts.
Bullish Takeaways- Bullish analysts point to the company's new multiyear license with a major Chinese smartphone vendor as a key growth driver. This agreement is expected to increase annual recurring revenue by $26 million to approximately $580 million.
- The raised third-quarter revenue guidance, forecasted at $155 million to $159 million, reflects a 14% boost over prior expectations and underscores accelerating top-line momentum.
- Estimates for calendar year 2026 and 2027 revenue and earnings per share have been increased, indicating improved long-term profitability forecasts.
- The expanded licensing portfolio and new agreements are viewed as enhancing valuation. Ongoing opportunities have been identified in consumer electronics and potential future licensing with streaming video platforms.
- Bearish analysts remain cautious about sustainability of near-term gains, noting that upgraded revenue forecasts are dependent on ongoing successful licensing execution.
- The stock maintains a Hold rating from some firms, signaling uncertainty around upside beyond the current valuation after the recent run-up.
- Concerns also persist regarding the concentration of revenue from a limited set of large vendor agreements, which could pose risks if market dynamics shift.
What's in the News
- InterDigital was awarded a U.S. Department of War contract to lead advanced spectrum coexistence research for civil and military applications, in collaboration with DeepSig and Skylark Wireless (Key Developments).
- The company raised its third-quarter 2025 revenue guidance to a range of $155 million to $159 million, up from prior guidance of $136 million to $140 million, and increased expected diluted EPS (Key Developments).
- InterDigital's Board of Directors approved an increase in the quarterly cash dividend from $0.60 to $0.70 per share, effective with the fourth quarter 2025 dividend (Key Developments).
- At the International Broadcasting Convention (IBC) 2025, InterDigital will demonstrate video innovation, highlighting enhanced Versatile Video Coding (VVC) with Film Grain preservation for improved streaming quality (Key Developments).
- The company concluded arbitration with Samsung Electronics, resulting in a new patent license agreement covering cellular wireless and video technologies (Key Developments).
Valuation Changes
- Consensus Analyst Price Target has risen slightly from $323.75 to $328.75.
- Discount Rate has decreased marginally from 8.60% to 8.58%.
- Revenue Growth outlook has improved, with the projected decline moderating from -10.35% to -9.79%.
- Net Profit Margin estimate has increased, moving from 29.14% to 29.93%.
- Future P/E ratio has declined moderately from 59.73x to 57.94x. This indicates a slight improvement in valuation.
Disclaimer
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