On Wednesday, BWS Financial maintained a Buy rating on Adeia (NASDAQ:ADEA), with a price target of $16.00. Following Adeia's announcement of a licensing agreement with Amazon.com (NASDAQ:AMZN), the financial firm foresees an uptick in the company's free cash flow by 2025.
This agreement is significant as it marks the first time Amazon, now a $2.28 trillion market cap company with 11.93% revenue growth in the last twelve months, has become a licensee of Adeia, suggesting potential catch-up revenue to be reflected in Adeia's full-year guidance.
The deal with Amazon is noted as the largest among several video streaming licenses that Adeia has signed. This milestone reinforces the narrative that Adeia's growth is not solely reliant on legacy technologies but is also expanding through new strategic partnerships. With this licensing agreement in place, Adeia is expected to see an increase in its baseline revenue, partnering with Amazon at a time when the tech giant is trading near its 52-week high and demonstrating strong market performance with a 47.36% return over the past year.
According to BWS Financial, the partnership with Amazon is poised to bolster Adeia's financial position, providing a solid foundation for its investment story.
"Looking ahead to 2025, this agreement should result in higher baseline revenue for ADEA along with free cash flow that could be used to accelerate debt reduction," the firm said in its note.
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