InterDigital Inc (IDCC)

[Gamco]

InterDigital, Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next
[e-mail] (Simply Wall St)
Sun, February 18, 2024 at 8:22 AM EST

It's been a pretty great week for InterDigital, Inc. (NASDAQ:IDCC) shareholders, with its shares surging 13% to US$117 in the week since its latest annual results. The result was positive overall - although revenues of US$550m were in line with what the analysts predicted, InterDigital surprised by delivering a statutory profit of US$7.62 per share, modestly greater than expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on InterDigital after the latest results.

After the latest results, the three analysts covering InterDigital are now predicting revenues of US$633.1m in 2024. If met, this would reflect a notable 15% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to tumble 32% to US$5.71 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$497.4m and earnings per share (EPS) of US$4.03 in 2024. So we can see there's been a pretty clear increase in sentiment following the latest results, with both revenues and earnings per share receiving a decent lift in the latest estimates.

It will come as no surprise to learn that the analysts have increased their price target for InterDigital 7.5% to US$126on the back of these upgrades. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on InterDigital, with the most bullish analyst valuing it at US$140 and the most bearish at US$106 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 15% growth on an annualised basis. That is in line with its 14% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 13% annually. So although InterDigital is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider industry.

The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around InterDigital's earnings potential next year. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on InterDigital. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for InterDigital going out to 2025, and you can see them free on our platform here..
https://finance.yahoo.com/news/interdigital-inc-just-beat-earnings-132218807.html