Byron Capital’s Tom Astle raises target on Wi-LAN to $7.50

Wi-LAN today announced it had initiated two separate LTE-related patent infringement litigations in the U.S. District Court for the Southern District of Florida against Alcatel-Lucent USA and against Ericsson, among other parties.On Monday, Wi-LAN (TSX:WIN) reported it had acquired more than 150 patents from broadband solutions provider Alvarion Ltd. (NASDAQ:ALVR) for $19 million.

Wi-LAN CEO Jim Skippen said the acquisition was an important one because it strengthened the Ottawa-based patent player’s 4G patent portfolio.

Today, the company announced it had initiated two separate LTE-related patent infringement litigations in the U.S. District Court for the Southern District of Florida against Alcatel-Lucent USA and against Ericsson, among other parties.

Byron Capital analyst Tom Astle says adding 150 strong 4G patents to Wi-LAN’s already impressive collection of more than 500 makes it a force to be reckoned with. He says this war chest of patents puts the company in the top five of all 4G patent holders worldwide, a status Astle believes increases the company’s odd of successful litigation. The Byron Capital analyst says he has growing confidence that he previous fiscal estimates for Wi-LAN in 2013 were too conservative. He now believes Wi-LAN will earn $.55 cents a share on revenue of $117-million. In a research update to clients this morning, Astle maintained his BUY rating on Wi-LAN, but raised his target to $7.50, up a dollar from his previous target price.

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After the thrill ride that was 2009 through part of last year, the time since has been relatively quiet for shareholders of Wi-LAN. Since peaking at more than $9 last summer, shares of the company trickled off, tripping to under $5 this past May. But the company’s trajectory over a longer time frame has been decidedly up. Under the watch of CEO Jim Skippen, Wi-LAN’s revenue has climbed from just over $2 million in fiscal 2006 to the more than $100 million in fiscal 2011. The Ottawa-based company has quietly become one of the world’s top patent acquirers, on par or better than Apple, Google and Samsung in the third quarter of 2011. Wi-LAN was founded in 1992, commercializing a range of communications and consumer electronics products including routers, 3G handsets and WiMAX base stations. The Company now has more than three-thousand patents, and has already licensed their technologies to blue chip techs such as Cisco, Nokia, Panasonic, Samsung.

Astle says there are a couple risk factors investors should be aware of. First, he says, the next few quarters are unlikely to be strong as Wi-LAN will incur growing litigation expenses as trial dates near. He also points out that Wi-LAN peers Acacia and RPX have been quit weak of late, but says this appears to be mainly due to company-specific reasons.

Shares of Wi-LAN on the TSX closed today up 1.1% to $5.57.

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