Analyst Forecasts For InterDigital, Inc. (NASDAQ:IDCC) Are Surging Higher

InterDigital, Inc. (NASDAQ:IDCC) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance. Investors have been pretty optimistic on InterDigital too, with the stock up 20% to US$81.02 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.

Following the latest upgrade, the current consensus, from the four analysts covering InterDigital, is for revenues of US$524m in 2023, which would reflect a discernible 6.3% reduction in InterDigital's sales over the past 12 months. Statutory earnings per share are supposed to nosedive 21% to US$5.35 in the same period. Prior to this update, the analysts had been forecasting revenues of US$409m and earnings per share (EPS) of US$2.72 in 2023. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

Check out our latest analysis for InterDigital

Despite these upgrades, the analysts have not made any major changes to their price target of US$92.75, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on InterDigital, with the most bullish analyst valuing it at US$114 and the most bearish at US$55.00 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 8.3% by the end of 2023. This indicates a significant reduction from annual growth of 5.1% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 12% per year. It's pretty clear that InterDigital's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So InterDigital could be a good candidate for more research.

Analysts are definitely bullish on InterDigital, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including recent substantial insider selling. For more information, you can click through to our platform to learn more about this and the 1 other warning sign we've identified .

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.