Industrial Alliance maintains $7.70 target on Wi-LAN

Industrial Alliance analyst Al Nagaraj says Wi-LAN’s (Wi-LAN Stock Quote, Chart, News: TSX:WIN) loss in a Texas courtroom Monday is disappointing, but does not change his long-term view of the stock.

On Monday, shares of Wi-LAN fell more than 30% after announcing that it was not successful in its case against Alcatel Lucent, Ericsson, HTC, and Sony. A jury in the U.S. District Court for the Eastern District of Texas, Tyler Division, determined that the four patents in suit were not infringed upon.

Shares of Wi-LAN battled back yesterday, gaining $.53 of the $1.61 it had lost the day before. Many analysts trimmed their price targets as a result of the potential for lost revenue from the case, but Nagaraj did not. In a research update to clients following the case, the Industrial Alliance analyst maintained his BUY rating and $7.70 one-year target on Wi-LAN.

Nagaraj says that although he is “highly disappointed” with the jury verdict, he notes that the patents in question here are all base station communication related, and for the most part deal with specific interactions of a subscriber terminal with a base station. These patents, which were originally assigned to Airspan Networks, are a small subset of the overall target market for WiLAN, he points out.

Investors should remember, says Nagaraj, that although this is a setback for Wi-LAN, the verdict in this case has no bearing whatsoever on Wi-LAN’s other patents and lawsuits, including upcoming trials against Apple, Toshiba and BlackBerry. He says the bigger picture is clear: “WiLAN has a strong suite of more than 3,000 patents and it will be successful in signing licenses and grow its revenues for many years to come.”

At press time, shares of Wi-LAN were down .3% to $3.82.

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