Industrial Alliance upgrades Wi-LAN to “Strong Buy”

Industrial Alliance analyst Al Nagaraj says the beating Wi-LAN (TSX:WIN) shares have taken following its loss to Apple is a buying opportunity.

On Wednesday, a jury in Texas found that Wi-LAN’s U.S patent number RE37,802 was not found infringed upon by Apple. Shares of the Ottawa patent player fell 25% the following day.

Nagaraj says the focus on a single patent obscures the fact that Apple will face further lawsuits from Wi-LAN because its patents cover fundamental technology for enabling wireless communications, IPTV and display technologies. The Industrial Alliance analyst says he expects Apple will actually sign a licensing agreement with Wi-LAN within the next twelve months because losing a lawsuit would be a much more costly option because damages for willful infringement of patents can run to billions of dollars.

Nagaaj says that even without an agreement with Apple, Wi-LAN is in good shape, noting the company’s $159-million in cash and revenue backlog of $325-million. He believes potential agreements with Ericsson and Toshiba could drive revenues higher in the coming year. Longer term, he says, the evolution of mobile beyond 4G could boost revenues from existing licensees and drive new deals.

In a research update to clients this morning, Nagaraj reiterated his (C)$7.70 target on Wi-LAN, but upgraded his rating on the stock to STRONG BUY, based on the recent depreciation in share price.

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