Value
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 3.2 |
| P/S | 3.0 |
| EV/EBITDA | 1.1 |
| Fwd P/E | 4.4 |
| PEG | 8.3 |
| Analyst target | 7.5 |
- ▸Forward P/E: 28.2x
- ▸PEG: 0.78
IDCC · Why this verdict
Why InterDigital (IDCC) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictBUY WAIT
Overall score5.9/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
InterDigital combines genuinely exceptional business quality — 44% gross margins, free cash flow converting at 126% of net income, and a four-quarter earnings beat streak averaging 35% upside to consensus — with the market pricing in uncertainty via a 12% short interest and a declining revenue trend, creating a 36% gap to analyst targets that represents a meaningful opportunity if the revenue trajectory stabilizes.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue is declining at roughly 2% year-over-year, which limits the multiple the market will sustain and raises the risk that the high-quality earnings profile rests on a shrinking top line rather than a growing one. Growth breakdown | Revenue growth turns positive (above 0% year-over-year) for 2 consecutive quarters, removing the growth-headwind concern. | →Stable |
| CounterLicensing businesses experience inherent revenue lumpiness tied to deal-signing timing rather than underlying demand erosion; strong margins and cash flow remaining intact suggest the economics of existing licenses are sound. | ||
The business converts earnings into free cash flow at 126% of net income while sustaining a 44% gross margin and a 36% return on equity — a combination that indicates the underlying economics are genuine and not dependent on accounting presentation. Quality breakdown | Free cash flow conversion remains above 100% of net income for the next 2 annual reporting periods, confirming the cash generation is structural. | →Stable |
| CounterA 12% short interest reflects market skepticism that the licensing-driven business model is durable; if royalty renewal rates deteriorate, the cash-flow profile could compress rapidly with limited operational flexibility to offset the decline. | ||
The company has beaten EPS estimates in all four of the last four quarters, with an average positive surprise of roughly 35% — a streak suggesting either disciplined guidance discipline or genuine earnings power that exceeds the sell-side model. Earnings | A fifth consecutive positive EPS surprise is delivered at the next reported quarter, extending the beat streak. | ↓Deteriorating |
| CounterThe wide average surprise is driven primarily by a single outlier quarter where actual results exceeded estimates by more than 93%; the most recent beat was a far more modest 2%, suggesting the magnitude of positive surprises is already compressing significantly. | ||
The analyst consensus target implies roughly 36% upside from the current price, and the risk/reward geometry is approximately 5-to-1 in favor of upside — an unusually wide spread for a profitable, cash-generating franchise trading near a 52-week pullback. Price targets | Price closes at least 15% toward the consensus target over the next 12 months as the technical recovery setup plays out. | ↑Improving |
| CounterWith only 3 analysts covering the stock, the consensus target may be poorly diversified in opinion and potentially stale; the 12% short interest signals that sophisticated investors are actively fading the upside case with conviction. | ||
Revenue is declining at roughly 2% year-over-year, which limits the multiple the market will sustain and raises the risk that the high-quality earnings profile rests on a shrinking top line rather than a growing one.
→StableGrowth breakdown
- Expectation
- Revenue growth turns positive (above 0% year-over-year) for 2 consecutive quarters, removing the growth-headwind concern.
CounterLicensing businesses experience inherent revenue lumpiness tied to deal-signing timing rather than underlying demand erosion; strong margins and cash flow remaining intact suggest the economics of existing licenses are sound.
The business converts earnings into free cash flow at 126% of net income while sustaining a 44% gross margin and a 36% return on equity — a combination that indicates the underlying economics are genuine and not dependent on accounting presentation.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 100% of net income for the next 2 annual reporting periods, confirming the cash generation is structural.
CounterA 12% short interest reflects market skepticism that the licensing-driven business model is durable; if royalty renewal rates deteriorate, the cash-flow profile could compress rapidly with limited operational flexibility to offset the decline.
The company has beaten EPS estimates in all four of the last four quarters, with an average positive surprise of roughly 35% — a streak suggesting either disciplined guidance discipline or genuine earnings power that exceeds the sell-side model.
↓DeterioratingEarnings
- Expectation
- A fifth consecutive positive EPS surprise is delivered at the next reported quarter, extending the beat streak.
CounterThe wide average surprise is driven primarily by a single outlier quarter where actual results exceeded estimates by more than 93%; the most recent beat was a far more modest 2%, suggesting the magnitude of positive surprises is already compressing significantly.
The analyst consensus target implies roughly 36% upside from the current price, and the risk/reward geometry is approximately 5-to-1 in favor of upside — an unusually wide spread for a profitable, cash-generating franchise trading near a 52-week pullback.
↑ImprovingPrice targets
- Expectation
- Price closes at least 15% toward the consensus target over the next 12 months as the technical recovery setup plays out.
CounterWith only 3 analysts covering the stock, the consensus target may be poorly diversified in opinion and potentially stale; the 12% short interest signals that sophisticated investors are actively fading the upside case with conviction.
Per-dimension breakdown
Quality
8.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 8.8 |
| ROA | 6.9 |
| Gross margin | 10.0 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 6.2 |
| FCF quality | 10.0 |
| Moat | 6.5 |
| Rule of 40 | 9.5 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 26%
- ▸Strong margins: 38%
- ▸Excellent cash conversion: 199% FCF/NI
- ▸Rule of 40: 63 (elite)
Growth
4.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 0.0 |
| EPS growth | 9.3 |
- ▸Declining revenue: -13%
Momentum
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 5.0 |
| Volume | 4.7 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.5 |
| Analyst rating | 5.0 |
| Price target | 9.1 |
- ▸LLM news sentiment: +0.50 (n=1)
- ▸Analyst upside: 39%
Insider
6.4/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 7.2 |
| notable moves | 7.0 |
- ▸Insider selling (low materiality) — $1,015,638 (0.012% of mkt cap)
Peer rank
3.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.2 |
| quality rank | 8.6 |
| growth rank | 0.1 |
- ▸Best-in-class margins
Technical
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 5.3 |
| support resistance | 5.7 |
| 52w position | 6.3 |
| gap | 5.0 |
Risk (lower is worse)
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 3.6 |
| days to cover | 0.0 |
| volatility | 4.4 |
| put call | 6.7 |
| implied vol | 6.0 |
| beta | 5.3 |
| debt equity | 8.7 |
Catalyst
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 6.8 |
| news activity | 5.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more. | News modifier +2 (HOLD_IF_HOLDING → STRONG_BUY_WAIT).
Engine technical detail
verdict_path:
L4:PATH_F_HOLD|L3:NEWS_MOD=+2Passed (9)
- MOMENTUM:5.0>=4.5
- ASYMMETRY:2.8>=1.5
- INSIDER:OK
- DEATH_CROSS:QUALITY_MOMENTUM_EXEMPT
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:36d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (2)
- MOMENTUM:5.0<5.5 (soft — BUY_NOW allowed but watch)
- DEATH_CROSS:quality=8.7>=7.5+momentum=5.0>=5.0 exempted
Reward-to-Risk
2.76
Upside
+17.8%
Downside
6.5%
Sizing output
STARTER
SetupRange Bound — RSI 59 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 1.42>1.3
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:5.0>=4.5. Top dim: Quality at 8.7; weakest: Peer rank at 3.9. No conviction either direction.
The strongest dimensions are Quality at 8.7, Sentiment at 7.0, and Catalyst at 7.0; the weakest are Peer rank at 3.9, Growth at 4.7, and Risk (lower is worse) at 5.0. The V9 engine cleared all gates with 2 warnings, producing an asymmetric reward-to-risk of 2.76 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Exceptional Cash Generation Margins
Trip ifFCF-to-net-income ratio falls below 80% for 2 consecutive reporting periods, indicating cash generation is materially eroding.
- P2Four Quarter Beat Streak
Trip ifEPS falls below consensus by more than 3% in 2 of the next 3 reported quarters.
- P3Material Analyst Upside Target
Trip ifAnalyst consensus price target compresses below $320, reducing projected upside to less than 11% from the current $288.87 price level.
- P4Declining Revenue Growth Headwind
Trip ifRevenue growth turns positive and exceeds 5% year-over-year for 2 consecutive quarters, removing the weak-growth overhang.