Adeia stock is a buy, this analyst says

Roth Capital Markets analyst Scott Searle initiated coverage on Adeia (Adeia Stock Quote, Chart, News, Analysts, Financials NASDAQ:ADEA) with a “Buy” rating and a 12-month price target of $26.00, citing accelerating recurring sales from over-the-top (OTT) media and next-generation semiconductor hybrid bonding technologies.

In a June 20 report, Searle said Adeia is well-positioned to benefit from increased adoption of data center and AI applications starting in 2026, supported by over 85% recurring revenue, free cash flow margins above 40%, and a valuation of roughly 9x estimated 2026 earnings.

Adeia develops, patents, and licenses advanced technologies used in the media and semiconductor industries.

“DEA has a long lineage of innovation in media (predecessor companies include Macrovision, Rovi, Tivo, etc.), which has driven a $330M+ annual recurring licensing opportunity,” Searle said. “While traditional Pay TV, or linear TV, is in secular decline, we believe that OTT licensing opportunities are poised to drive increased penetration (currently at ~25%) and re-accelerate growth starting in 2026. We believe that OTT could rival Pay TV sales (50%+ of the 2024 mix) in the 2028/29 time frame.”

Searle said hybrid bonding could be a breakthrough for next-gen memory and high-performance logic chips. The technology boosts speed, lowers power use and costs, and enables smaller, more efficient chip designs. It’s key for 3D NAND, HBM DRAM, and chiplet-based GPUs and CPUs, especially in AI and data center applications. He said Adeia’s $100-million sales target by 2029 is likely conservative, with major growth expected starting in 2026.

Searle thinks that Adeia will generate $234.2-million in Adjusted EBITDA on $403.1-million in revenue in fiscal 2025. He expects those numbers to improve to $239.1-million in Adjusted EBITDA on $420.4-million in revenue in fiscal 2026.

“Despite the extremely attractive financial model ($150M+ of FCF, 40%+ FCF margins), potential near-term news flow (semis and OTT), largely recurring revenue model (85%+ of sales), and anticipated re-accelerating growth, ADEA is discounted to IP and SaaS peers (~4x EV/2026E sales and ~9x 2026 Non-GAAP EPS vs. comps at 6-10x+ and 20x+, respectively),” Searle said. “With estimated annual recurring Non-GAAP EPS of ~$2.00 exiting 2027, we see meaningful upside from current levels.”

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