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Shares of InterDigital, Inc. IDCC have soared 82.8% 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 49.3% 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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Comprehensive Portfolio Buoys IDCC
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.
InterDigital boasts a comprehensive portfolio of more than 33,000 granted patents and applications. The company witnessed an exceptional year in innovation in 2024, with more than 5,000 new patent filings worldwide. In 2024, adjusted EBITDA grew 60% year over year to $551 million, indicating greater operational efficiency and improved profitability.
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.
Focus on 6G Research Hold Promise
InterDigital has collaborated with major academic institutions worldwide to expedite 6G research. Data traffic demand is growing exponentially worldwide, and 5G networks are required to support this high-capacity end-user throughput. The MIMO (Multiple-Input, Multiple-Output) technology leverages an active antenna system that consists of multiple antenna elements to augment the performance, reliability and overall efficiency of wireless communication systems. The 6G technology, which relies on Massive MIMO, will enable significantly higher data rates than its predecessors, leading to improved spectrum efficiency.
IDCC has joined forces with IIT Kanpur, India, to accelerate critical advancements in MIMO systems that will enable 6G networks to cater to a diverse range of applications. It is also collaborating with the University of Surrey to drive research in unique areas, such as reconfigurable intelligent surfaces and integrated sensing and communication, to pave the way for the development of cutting-edge 6G technologies. IDCC’s AI-powered Receiver Design for Future Wireless Communications has been validated by Keysight Technologies, Inc. KEYS. The state-of-the-art innovation optimizes throughput performance, reduces communication overhead and simplifies receiver architecture, making it suitable for 6G applications.
With a long-term earnings growth expectation of 15%, the stock delivered an average earnings surprise of 158.4% in the trailing four quarters.