Wi-LAN spikes on Dell deal, but it’s still undervalued, says Cantor Fitzgerald

Cantor Fitzgerald analysts Tom Liston and Justin Kew say today’s deal with Dell underscores their belief that Wi-LAN (Wi-LAN Stock Quote, Chart, News: TSX:WIN) is significantly undervalued.

This morning, Wi-LAN announced that it had signed a licence agreement to settle patent litigation with Dell, the news sent the stock up by more than 8%.

Liston and Kew note that Dell is one of the defendants in Wi-LAN’s upcoming handset trial that is scheduled to begin this October. The analysts believe that Dell’s market share in the space is very modest compared to co-defendants Apple, HTC and HP, but today’s agreement is a clear signal to those tech giants that Wi-LAN’s position is strong.

In a research update to clients this morning, The Cantor Fitzgerald analysts reiterated their view that Wi-LAN is a “rare opportunity” because it is a stock with a valuation that provides a floor price, has well-defined catalysts, and has significant upside potential. The analysts maintained their BUY recommendation and $7.00 one-year target on Wi-LAN.

Wi-LAN has a total of six trials scheduled in the second half of this year, including its contract dispute trial with Hon Hai. Liston and Kew note that, although they always come prepared to, Wi-LAN has actually never gone to trial.

The analysts believe that most, if not all, of the company’s scheduled trials will be settled prior to their trial dates. They say settlement becomes an even more compelling option for defendants facing multiple suits from Wi-LAN, pointing out that Alcatel-Lucent is a defendant in three cases this year, Ericson two, and HTC two.

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