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Investing.com - Roth/MKM initiated coverage on Adeia (NASDAQ:ADEA) with a Buy rating and a $26.00 price target, citing the company’s strong intellectual property portfolio and growth prospects. According to InvestingPro data, the stock appears undervalued, with analysts setting targets between $17-$18, suggesting significant upside potential from current levels.
The research firm identified Adeia as a leading developer and licensor of intellectual property for media and semiconductor markets, with a business model generating over 85% recurring sales. The company, currently valued at $1.42 billion, maintains strong profitability with a 100% gross margin and impressive free cash flow characteristics.
Roth/MKM highlighted Adeia’s potential for sales acceleration as over-the-top (OTT) media services and next-generation semiconductor hybrid bonding solutions become more widely licensed and commercialized.
The firm specifically emphasized the semiconductor opportunity as "meaningful," with expected growth driven by next-generation data center and artificial intelligence penetration accelerating in 2026 and beyond.
The $26 price target reflects Roth/MKM’s valuation of approximately 9 times Adeia’s projected 2026 earnings per share, with the firm also noting the company’s strong free cash flow characteristics with margins exceeding 40%.
In other recent news, Adeia Inc reported its Q1 2025 earnings, which fell short of analysts’ expectations. The company posted an earnings per share (EPS) of $0.26, missing the forecasted $0.29, and reported revenue of $87.7 million, which was below the anticipated $93.85 million. Despite these results, Adeia’s patent portfolio grew by 4%, and the company maintained a customer renewal rate exceeding 90%, indicating strong customer relationships. Furthermore, Adeia signed 10 new license agreements and renewed six others, demonstrating continued momentum in its licensing business.
The company’s outlook for the full year 2025 remains unchanged, with projected revenue between $390 million and $430 million. Adeia also plans to maintain an adjusted EBITDA margin of approximately 59%. In terms of strategic moves, the company acquired patent portfolios in micro LEDs and imaging, which are expected to enhance its media and semiconductor businesses. The company’s strong cash generation allowed for stock buybacks and dividend payments, reflecting a balanced capital allocation strategy. Analysts from firms like Rosenblatt Securities expressed interest in Adeia’s new deals, particularly in the OTT and semiconductor sectors, which are seen as areas of growth potential.
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