On Thursday, Roth/MKM maintained a Buy rating on Impinj Inc (NASDAQ: NASDAQ:PI) and increased the price target to $125 from $115. The adjustment follows a significant legal settlement and cross-licensing agreement between Impinj and NXP (NASDAQ:NXPI). This deal is set to provide Impinj with a substantial one-time payment and ongoing royalties, alongside a reduction in litigation costs.
The settlement will result in a one-time payment of $45 million to Impinj and annual royalty payments exceeding $15 million. These developments are expected to have a positive financial impact on the company, with a projected increase in fully taxed earnings per share (EPS) by $0.40 to $0.50. The ongoing royalties are anticipated to contribute over $0.30 to the EPS, and savings from reduced litigation expenses, which peaked at $15.7 million in 2023, should add more than $0.15.
The agreement not only brings financial benefits but also solidifies Impinj's intellectual property (IP) leadership in the RAIN RFID sector. The settlement and cross-licensing arrangement mark an important milestone for the company, highlighting its strong position in the industry.
Roth/MKM's revised price target reflects the anticipated positive earnings impact and the reinforcement of Impinj's IP standing. The firm's confidence in Impinj's market position and financial outlook is underscored by the maintained Buy rating and the increase in the price target.
The settlement and the financial gains from it are significant for Impinj, as they reduce previous financial burdens and establish a steady stream of royalty income.
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