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Shares of InterDigital, Inc. IDCC have surged 79.6% over the past year, driven by improved market demand across its portfolio on the back of a flexible business model and solid cash flow. Earnings estimates for the current fiscal have increased a stellar 137.1% over the past year, implying robust inherent growth potential.
With healthy fundamentals, this Zacks Rank #1 (Strong Buy) stock appears to be a solid investment option at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.
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IDCC Stock Rides on Portfolio Strength
A well-established global footprint, diversified product portfolio and ability to penetrate different markets are key growth drivers for InterDigital. Apart from a strong portfolio of wireless technology solutions, the addition of technologies related to sensors, user interface and video to its offerings is likely to drive considerable value, given the massive size of the market it offers licensing technologies.
IDCC’s commitment to licensing its broad portfolio of technologies to wireless terminal equipment makers, which allows it to expand its core market capability, is laudable. It has leading companies, such as Huawei, Samsung, LG and Apple, under its licensing agreements. The company is focused on pursuing agreements with unlicensed customers in the handset and consumer electronics markets.
InterDigital aims to become a leading designer and developer of technology solutions and innovation for the mobile industry, the Internet of Things and allied technology areas by leveraging its research and development capabilities, technological know-how and rich industry experience. At the same time, the company intends to enhance its licensing revenue base by adding licensees and expanding into adjacent technology areas that align with its intellectual property position.
InterDigital Outlook Shows Promise
For 2024, with solid traction across the business led by a recent license agreement with Oppo and a binding arbitration agreement with Lenovo, the company expects revenues in the range of $855-$865 million, up from $690-$740 million expected earlier. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) are forecasted at $533-$543 million, up from $378-$416 million estimated earlier. IDCC now expects non-GAAP earnings in the band of $14.69-$14.99, up from the prior projection of $9.70-$10.95.
With a VGM Score of B, the stock has a long-term earnings growth expectation of 15%. It delivered an earnings surprise of 163.7%, on average, in the trailing four quarters.