Shares of Immersion Corporation (NASDAQ:IMMR) skyrocketed to 11-month high on the announcement of a key settlement agreement with Apple Inc. (NASDAQ:AAPL). In addition to the settlement, it is believed the company entered into a licensing agreement with the iPhone maker.
Patent Infringement Claims
The settlement stems from a lawsuit first filed in 2016 accusing the Tech giant of patent infringement in relation to the use of hepatic feedback in iOS products. Immersion had also taken the tech giant to task on the use of Taptic Engine in Apple Watch and iPhones. In May the same year, the company expanded the lawsuit to cover Apple’s MacBook’s that use Force Touch for trackpads.
Apple has since agreed to settle the claims to avoid a long-running lawsuit that could have resulted in serious repercussions. Terms of the deal remain under wraps.
Share Price Target
The news appears to have strengthened investor confidence on Immersion, given that the Apple win could help the company generate a significant amount of revenues on licensing fees. Research firm Craig-Hallum has since raised its price target for the stock from $12 to $15, which is more than double the stock’s closing price as of Friday last week.
According to the firm, Immersion stands to generate non-GAAP earnings of between $1.5 and $1.8 because of the Apple settlement. Last year the stock was under immense selling pressure, which saw it drop to the $6 a share handle. With the Apple deal in place, the company’s revenue base is set to receive a major boost which should lead to better earnings.
In the latest quarter, the company generated a net loss of $0.18 compared to earnings of $0.24 a share.
“We continue to make positive progress in furthering the value and adoption of haptics across a growing number of markets, as we added, renewed or expanded numerous licensing engagements during our third quarter of 2017,” said CEO Vic Viegas.