Yahoo Finance InterDigital (IDCC) Soars 70% YTD: Will the Uptrend Continue?
Shares of InterDigital, Inc. IDCC have surged 70.3% year to date, backed by solid top-line growth and continued momentum in the licensing business. Earnings estimates for the current fiscal for the stock have increased 61.1% over the past year, implying robust inherent growth potential. With healthy fundamentals, this Zacks Rank #1 (Strong Buy) stock appears to be a solid investment option at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.
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Growth Drivers
Headquartered in Wilmington, DE, InterDigital is a pioneer in advanced mobile technologies, which enable wireless communications and capabilities. The company designs and develops a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G, and IEEE 802-related products and networks.
A well-established global footprint, diversified product portfolio and ability to penetrate different markets are key growth drivers for the company. Apart from a strong portfolio of wireless technology solutions, the addition of technologies related to sensors, user interface and video to its offerings is likely to drive considerable value, given the massive size of the market it offers licensing technologies to.
InterDigital recently reported strong first-quarter 2023 results, with both the bottom line and top line beating the respective Zacks Consensus Estimate. The company recorded nearly a two-fold revenue increase driven by solid contributions from Lenovo and Samsung licensing deals. The company expects this growth momentum to continue in the forthcoming quarters.
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. The company is focused on pursuing agreements with unlicensed customers in the handset and consumer electronics markets.
The company 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 a long-term earnings growth expectation of 13.9%. It delivered a stellar earnings surprise of 170.9%, on average, in the trailing four quarters. With a VGM Score of B, InterDigital currently appears to be an enticing investment option in this volatile market.
Other Key Picks
Workday Inc. WDAY, carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 7.67%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 11.24%. It has long-term earnings growth expectation of 25.8%.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support.
Akamai Technologies, Inc. AKAM, sporting a Zacks Rank #1, delivered an earnings surprise of 4.9%, on average, in the trailing four quarters. It has long-term earnings growth expectation of 10%.
Akamai is a global provider of content delivery network and cloud infrastructure services. The company’s solutions accelerate and improve the delivery of content over the Internet, enabling faster response to requests for web pages, streaming of video & audio, business applications, etc. Akamai’s offerings are intended to reduce the impact of traffic congestion, bandwidth constraints and capacity limitations on customers.
IHS Holding Limited IHS, carrying a Zacks Rank #2, is another key pick. Based in London, the United Kingdom, it is one of the largest independent owners, operators and developers of shared communications infrastructure in the world by tower count.
IHS Holding has more than 39,000 towers across 11 markets — Brazil, Cameroon, Colombia, Egypt, Kuwait, Nigeria, Peru, Rwanda, South Africa and Zambia. The stock has gained 60.7% in the past six months.
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