Analyst Shines Light on Immersion Corporation Following Confidential Agreement with Apple
It’s a very rewarding trading day for investors in Immersion Corporation (NASDAQ:IMMR) with shares up over 48%, making the stock Wall Street’s bull of the day. The reason? Immersion entered into a global settlement and multi-year license agreement with Apple covering certain Immersion patents for cash with an option to extend the term until the expiration of the last licensed patent. As part of the settlement, both parties have agreed to dismiss all outstanding litigation, including the investigation by the U.S. International Trade Commission (ITC), which was scheduled to provide its initial determination on 1/31.
B.Riley FBR analyst Josh Nichols commented, “Although the terms of the agreement are confidential, we note that Samsung, a previous licensee whose agreement lapsed at the end of 2015, was paying approximately $20M/yr to license IMMR’s haptics technology. Clearly, the announcement is a significant win for the company and shareholders given the expected jump in revenue and the company’s recently announced $10M/yr in cost reduction initiatives. Additionally, the agreement is a strong endorsement of IMMR’s IP in the handset space, which we believe could spur a cascade of licenses as the rest of the space falls into line (e.g. Samsung, Motorola, and Fitbit). Already we have modeled $33M of revenue growth in 2018, up from $34M to $67M, but with the possibility of a lump sum payment from Apple in Q1, which clears the way for other potential licensees, we see potential upside to our 2018 revenue estimate.”
Nichols rates Immersion shares a Buy with a price target of $9.75, which represents a potential downside of 10% from where the stock is currently trading.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Josh Nichols has a yearly average return of 32.8% and a 54.1% success rate. Nichols has a -9.1% average return when recommending IMMR, and is ranked #333 out of 4761 analysts.
As of this writing, all the 4 analysts polled in the past 12 months rate Immersion stock a Buy. With a return potential of 10%, the stock’s consensus target price stands at $11.94.