Results: InterDigital, Inc. Beat Earnings Expectations And Analysts Now Have New Forecasts

Shareholders of InterDigital, Inc. (NASDAQ:IDCC) will be pleased this week, given that the stock price is up 13% to US$117 following its latest full-year results. InterDigital reported US$550m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$7.62 beat expectations, being 8.5% higher than what the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on InterDigital after the latest results.

See our latest analysis for InterDigital

Following the latest results, InterDigital's three analysts are now forecasting revenues of US$633.1m in 2024. This would be a solid 15% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to nosedive 32% to US$5.71 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$497.4m and earnings per share (EPS) of US$4.03 in 2024. There has definitely been an improvement in perception after these results, with the analysts noticeably increasing both their earnings and revenue estimates.

It will come as no surprise to learn that the analysts have increased their price target for InterDigital 7.5% to US$126on the back of these upgrades. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values InterDigital at US$140 per share, while the most bearish prices it at US$106. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting InterDigital is an easy business to forecast or the the analysts are all using similar assumptions.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 15% growth on an annualised basis. That is in line with its 14% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 13% annually. So although InterDigital is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards InterDigital following these results. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple InterDigital analysts - going out to 2025, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for InterDigital that you should be aware of.

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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.