Benzinga | Jul 16, 2020 05:06PM EDT

Why InterDigital's Recurring Revenue Has Oppenheimer Bullish

With more than 32,000 patents, InterDigital Wireless Inc (NASDAQ:IDCC) has significant earnings power, Oppenheimer said in a bullish initiation.

The InterDigital Analyst: Ian Zaffino initiated coverage of InterDigital with an Outperform rating and $90 price target.

The InterDigital Takeaway: "The patents are licensed on a multi-year basis and create a highly predictable, recurring revenue stream," Zaffino said in the Wednesday initiation note.

Here are some of the analyst's key takeaways on the company:

* IDCC is a leading R&D company. Its patents comprise 6% of all 5G patents integrated into major wireless standards. Some of the company's consumers include Apple, Samsung, LG and Huawei.

* InterDigital has a strong record of IP enforcement, and recently renewed its license with Huawei. "This could smooth the way to license the other handset makers that use its technology," said Zaffino.

* The recent acquisition of Technicolor gives IDCC a path to generate another $150 million of annual revenues within the next three to five years. This effort could create incremental EPS of $4.

* Potential licensing deals with Chinese manufacturers that are using IDCC technology.

IDCC Price Action: Shares of InterDigital closed Thursday's session higher by 3.62% at $58.11.