Dougherty & Co Downgrades InterDigital Inc. (IDCC) to Neutral
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Dougherty & Co downgraded InterDigital Inc. (NASDAQ: IDCC) from Buy to Neutral and removed its price target (prior $66.00) on valuation.
Analyst Charles Anderson said, "We have carried a Buy on IDCC shares for over three years and the stock has traded above our $66 Price Target for nearly two months. We don't see it going under our target anytime soon. In order to carry a Buy here, we would need to justify a PT in the $100 territory. Under a best-case scenario, we see EPS of ~$7.75 (on $600MM in recurring handset royalties and $100MM in recurring IoT royalties). A $100PT would be a 13x multiple on that EPS, or nearly 90% of the "full" multiple of 15x that we would favor. This strikes us as giving IDCC too much credit for potentially licensing China handset OEMs (always hard) and for the Avanci patent pool delivering on IoT deals (out of IDCC's control). Thus, we are going to step to the sidelines and downgrade from Buy to Neutral. At these levels to become constructive on the stock again, we would need to have increased confidence that the IoT opportunity is larger."
Shares of InterDigital Inc. closed at $78.08 yesterday.
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