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RPXC has already done well for investors in

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investora2z   Friday, 10/18/13 07:02:42 AM
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RPXC has already done well for investors in 2013. It has appreciated by nearly 80% on ytd basis, and it has doubled compared to the 52 week low of $8.55 made in November. The last two months have seen a 15% rise in the stock, which makes it a bit vulnerable to profit booking in case of negative news flow. The earnings are going to be declared at the end of this month, and that could be a short term trigger for the stock. Good earnings can take it beyond $19 levels, but negative surprises could lead to a lot of profit booking. So the exposure will be risky as usual. Even the last earnings had led to some profit booking, and thankfully the stock managed to stage a smart rebound. The valuations are higher, and good numbers will help improve the ratios. The ttm P/E is around 21.66, and the forward P/E (fye 31-Dec-2014) is 16.75. The difference indicates moderate expectations of growth over the next 4-5 quarters. This is inline with the management guidance for around $229 - $235 million in revenues, and Non-GAAP Net Income of between $50 - $53 million for 2013. The ttm revenues are currently around $217 million and the net income is $43 million. In 2012, the revenues were $197 million and the net income was $38.45 million. Considering the good growth trends in the market, there is scope for good growth in the top line. However, competition is also increasing, and several companies have become more aggressive in the marketplace. A patent assertion entity Spherix (SPEX) has recently acquired hundreds of patents with a clear strategy to monetize them through litigation and licensing. It has filed cases against giants like T-Mobile (TMUS). RPXC has a strong balance sheet with zero debt and good amount of cash. So the upward momentum can increase if the numbers are good.

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