Immersion Rises 28% YTD: Should You Buy, Hold or Sell the Stock?

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Immersion Corporation IMMR shares have gained 28.2% in the year-to-date (YTD) period, outperforming the Computer and Technology sector and the S&P 500 index’s return of 27.4% and 25.3%, respectively. Immersion has also outperformed other players in the Zacks Computer - Peripheral Equipment industry, including Logitech LOGI, TransAct Technologies TACT and Identiv INVE.

LOGI, TACT and INVE have lost 14%, 39.1% and 53.2%, respectively, in the year-to-date period. IMMR’s outperformance can be attributed to investors’ confidence in its innovative product portfolio and robust financials.

Growing Demand for Haptics Aids IMMR

Haptics are crucial components for devices like smartphones, IoT wearable products and automotive. Immersion’s haptic technology is part of gaming products made by Sony to smartphones made by ASUS. Immersion also partners with Original Equipment Manufacturers like Microsoft, Samsung, Google, Sony and Panasonic in the mobile, gaming, wearables and consumer electronics space.

Strong partnerships also bolster Immersion’s growth prospects. Over the past year, it has secured agreements with top smartphone manufacturers, gaming firms and automotive leaders, highlighting the widespread adoption of its technology. These partnerships validate Immersion’s product quality and secure long-term revenue potential.

IMMR is also gaining from the growth in AR and VR due to the extensive use of haptics in this space. According to a markets and markets report, the global AR/VR market is likely to reach $77.5 billion in 2028 from $32.5 billion in 2023, witnessing a CAGR of 19%. Besides its application in AR/VR gaming, haptic technology is also used in medical training, automotive, report operations, engineering and military.

The rising demand for haptics in multiple markets is driving Immersion’s top-line growth. IMMR’s robust IP portfolio encompasses numerous patents as well. These give IMMR a competitive advantage and help the company generate substantial licensing revenues.

The Zacks Consensus Estimate for Immersion’s 2024 revenues is pegged at $116.8 million, which suggests growth of a whopping 244.4% year over year. The Zacks Consensus Estimate for 2024 earnings is pegged at $1.96, indicating a year-over-year increase of 88.5%.

Immersion YTD Performance

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Immersion Exhibits a Lofty Valuation

Although the strong growth factors might make Immersion an attractive stock for purchase, the stock’s valuation is overstretched at present. The company carries a Zacks Value Style Score of C.