Jefferies upgrades InterDigital stock to Buy on streaming potential

Investing.com - Jefferies upgraded InterDigital Inc. (NASDAQ:IDCC) from Hold to Buy on Monday, while raising its price target to $450.00 from $340.00. The upgrade comes as InterDigital demonstrates impressive financial strength, with a robust 89.22% gross profit margin and strong revenue growth of 21.83% over the last twelve months.

The research firm cited confidence in InterDigital’s "multi-leg growth story," noting the company has already achieved $481 million in annual recurring revenue (ARR) from smartphones against its $500 million goal well ahead of its 2027 target.

Jefferies highlighted that attention now shifts to streaming, where InterDigital targets over $300 million in ARR by 2030, representing the next major growth opportunity for the company.

The firm believes InterDigital is well-positioned to succeed in the streaming vertical despite it being new territory, pointing to the company’s proven execution in smartphones, consumer electronics, and IoT, along with an estimated $500 billion total addressable market by 2027.

Jefferies also referenced a recent Disney patent infringement award that "underscores the uncompensated use of its IP portfolio," with the new $450 price target based on 35 times calendar year 2027 price-to-earnings ratio. The stock currently trades at a P/E ratio of 26.49 and has delivered an impressive 151.64% return over the past year.

In other recent news, InterDigital, Inc. reported its Q2 2025 earnings, significantly surpassing expectations with an earnings per share of $6.52, compared to the projected $2.17. The company’s revenue reached $300 million, exceeding the anticipated $167.93 million. Additionally, InterDigital announced a 17% increase in its quarterly cash dividend, raising it from $0.60 to $0.70 per share, effective in the fourth quarter of 2025. The company also renewed multi-year patent license agreements with Seiko Solutions and Sharp, covering various wireless and video standard technologies. Notably, InterDigital signed its first agreement with an electric vehicle charger manufacturer, expanding its reach into the EV market. Furthermore, InterDigital was awarded a contract by the U.S. Department of War to lead research on advanced spectrum coexistence technologies. This initiative will involve collaboration with industry partners DeepSig and Skylark Wireless. These recent developments highlight InterDigital’s ongoing strategic initiatives and strong financial performance.

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