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There are several potential catalysts for Wi-LAN’s stock, says Cantor Fitzgerald

Wi-LAN CEO Jim Skippen.
Wi-LAN CEO Jim Skippen.
Fresh off a strategic review that will see the company look to limit the outright purchase of patent portfolios and perhaps sell some of its “non-core” patents, Wi-LAN (TSX:WIN, Nasdaq: WILN) is undervalued, says Cantor Fitzgerald analyst Blair Abernethy.

In a research update to clients this morning, Abernethy maintained his “Buy” rating and (U.S.) $4.50 one-year target on Wi-LAN. The analyst says there are several potential catalysts that could unlock the value in the Ottawa-based company’s stock over the next year, including an aggressive share buyback, large license deals, and the divestiture of its patent portfolio.

Yesterday, Wi-LAN announced it had acquired a portfolio of medical patents that relate to Stent technology, the company’s first foray into medical technology. Also announced was the renewal of its license deal with Archos relating to Wi-Fi technologies. While Abernethy doesn’t see the Archos deal as material he does see value in these types of deals because he says they bring validity to Wi-LAN’s long term objective of doubling its recurring revenue base.

Abernethy says that at 2.4x his fiscal 2015 EV/Sales estimate, Wi-LAN is attractively priced compared to its peers, which trade at 2.5x to 4.5x EV/Sales. At $3.33 per share, he notes, the company is trading at approximately the value of its cash and order backlog, about $140-million and $275-million, respectively.

Shares of Wi-LAN on the Nasdaq closed today down .33% to $3.04.

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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