Stifel Nicolaus analyst Blair Abernethy says yesterday’s announcement that Samsung had agreed to an early renewal and expansion of its existing license agreement with Wi-LAN (TSX:WIN) gives him more “clarity and confidence” in the company.
Wi-LAN made the announcement yesterday, but did not provide details of the arrangement, which is an extension of a 2009 agreement. Management said it gives Samsung a license to patents for wireless mobile products but extends the scope and term of the deal.
Abernethy says Wi-LAN’s strategy of signing long term licenses is a non-litigious way is further validated by yesterday’s announcement, and he is intrigued by the the hint of further collaboration in the press release, noting that Samsung recently invested $25 million to launch Washington-based Intellectual Keystone Technology to strengthen its patent business.
Wi-LAN has a total of six trials scheduled in the second half of 2013, including actions against Hon Hai, Alcatel-Lucent, Apple, Ericson and HTC. Late last month, shares of the company spiked 8% after signing a license agreement that settled patent litigation with Dell
In a research update to clients today, Abernethy maintained his BUY rating and $6 one-year target price on Wi-LAN.
Abernethy says he expects Wi-LAN will generate EBITDA of $7.5-million on revenue of $81.7-million in fiscal 2013. He expects 35% topline growth the following year, to $110.3-million, and he expects the company’s EBITDA will rise sharply, to $59.9-million.