Zacks Equity Research Published on January 10, 2024
InterDigital, Inc. recently inked a patent license renewal agreement with Panasonic Entertainment & Communication Co., Ltd. for an undisclosed amount. The deal extends InterDigital’s HEVC (High-Efficiency Video Coding) patent license and underscores the healthy momentum of its licensing portfolio.
The renewal of the contract will enable this Japan-based multinational electronics corporation to continue using its technology without any dispute. In addition, Panasonic extended its digital TV license under InterDigital’s joint licensing program with Sony. The patent renewal agreement will enable Panasonic to strengthen its rich portfolio of assets in wireless technologies to better serve its customers.
InterDigital’s commitment to licensing its broad portfolio of technologies to wireless terminal equipment makers, which allows it to expand its core market capability, is laudable. It has leading companies, such as Huawei, Samsung, LG and Apple, under its licensing agreements. Consequently, the company expects to generate solid recurring revenues from the patent licensing business in the forthcoming quarters as well.
IDCC’s global footprint, diversified product portfolio and ability to penetrate different markets are impressive. Apart from the company’s strong portfolio of wireless technology solutions, the addition of technologies related to sensors, user interface and video to its offerings is likely to drive significant value, considering the massive size of the market it licenses. Furthermore, the company remains committed to pursuing acquisitions to drive its product portfolio and boost organic growth.
The company is focused on pursuing agreements with unlicensed customers in the handset and consumer electronics markets. InterDigital aims to become a leading designer and developer of technology solutions and innovation for the mobile industry, IoT and allied technology areas by leveraging its research and development capabilities, technological know-how and rich industry experience. At the same time, it intends to enhance its licensing revenue base by adding licensees and expanding into adjacent technology areas that align with its intellectual property position.
The stock has gained 77.6% over the past year compared with the industry’s growth of 4.1%.
InterDigital currently carries a Zacks Rank #2 (Buy).
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