InterDigital (NASDAQ:IDCC) shares jumped over 5% Wednesday after it was double-upgraded to Buy from Underperform, with the price target raised to $105 from $55 per share by BofA analysts in a note.
The firm upgraded the stock following its "impressive" Q1 results and its strong pipeline over the next 12 months, and TAM expansion.
"Strong 1Q results and robust catalysts over the next 1-2 years (medium-term) drive us to upgrade InterDigital, a leader in 5G device licensing, to Buy from U/P," said the analysts.
Even though IDCC shares have performed well this year, up 60%, BofA views the potential licensing agreements with Lenovo (OTC:LNVGY), Oppo, and Vivo as key medium-term drivers.
Furthermore, the firm is bullish on IDCC's medium-term outlook and strong management team.
"InterDigital is currently in binding arbitration with Samsung (KS:005930) and recently received a favorable ruling in the Lenovo case. The company already recognizes these revenues, though at a conservative level, and could see some upside once the cases finalize," explained the analysts. InterDigital also has ongoing cases with Oppo and Vivo, which should each add $40- 60mn in recurring revenues per year."
"In addition, we see stock upside from continued growth beyond wireless into CE, IoT, and Autos, and note that strong share buybacks are adding to the stock's attractiveness."