William Blair initiated research coverage of InterDigital, Inc. (IDCC $68.21), a research-and-development company that designs and develops wireless, visual, and other related technologies that enable connectivity and enhance immersive experiences across various communications and entertainment products.
Analyst Alessandra Vecchi stated that the company could increase annualized recurring revenue from roughly $400 million as of the third quarter of 2022 to $650 million over the next three to five years.
“InterDigital is a leading research-and-development company boasting a strong portfolio of roughly 28,000 patents related to wireless communications and video technologies, which it licenses to global wireless and consumer electronics manufacturers,” said Vecchi. “The company has a strong track record for retention, having licensed some customers for over 20 years and Samsung and Apple since before their first flagship phones shipped.
“InterDigital’s wireless innovations span the earliest digital cellular systems to the latest 5G solutions, and its portfolio includes numerous patents/patent applications that it believes are, may be, or may become essential to standards established by Standards Development Organizations (SDOs), including 3G, 4G, IEEE 802, and patents/patent applications that are or may become essential to current and future 5G standards,” added Vecchi. “The company’s strong recurring revenue, which is 88% of 2022 revenue, combined with its recent licensing momentum within wireless and its building momentum within consumer electronics, IoT, and auto give us confidence that InterDigital can continue to convert wireless OEMs into licensees and monetize its portfolio of video patents.”
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