Value
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.8 |
| P/S | 4.3 |
| EV/EBITDA | 3.9 |
| Fwd P/E | 5.0 |
| PEG | 3.4 |
| Analyst target | 9.0 |
- ▸Forward P/E: 25.0x
- ▸PEG: 3.54
IDCC · Why this verdict
Why InterDigital (IDCC) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.2/10
ConfidenceMEDIUM
MacroNEUTRAL
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. | →Stable |
| 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. | →Stable |
| 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.
→StableEarnings
- 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.
→StablePrice 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.
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.
Per-dimension breakdown
Quality
8.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 8.7 |
| Gross margin | 10.0 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 6.6 |
| FCF quality | 9.2 |
| Moat | 6.5 |
| Rule of 40 | 8.7 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 36%
- ▸Strong margins: 44%
- ▸Excellent cash conversion: 126% FCF/NI
- ▸Rule of 40: 53 (pass)
Growth
2.6/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.9 |
| EPS growth | 3.4 |
- ▸Declining revenue: -2%
Momentum
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 4.5 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope flat
Sentiment
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 9.8 |
| erm sentiment | 5.3 |
- ▸Analyst upside: 64%
Insider
3.9/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Modest insider selling — $2,315,849 (0.032% of mkt cap)
Peer rank
3.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.2 |
| quality rank | 9.2 |
| growth rank | 0.4 |
- ▸Superior ROE vs peers
- ▸Best-in-class margins
Technical
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.1 |
| support resistance | 3.9 |
| 52w position | 3.7 |
Risk (lower is worse)
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 3.7 |
| days to cover | 2.9 |
| volatility | 2.1 |
| put call | 7.3 |
| implied vol | 3.8 |
| beta | 5.3 |
| debt equity | 8.5 |
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 | 5.2 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 100.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (9)
- MOMENTUM:5.8>=5.5
- ASYMMETRY:3.5>=1.5
- INSIDER:OK
- DEATH_CROSS:QUALITY_MOMENTUM_EXEMPT
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:27d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (1)
- DEATH_CROSS:quality=8.9>=7.5+momentum=5.8>=5.0 exempted
Reward-to-Risk
3.50
Upside
+39.8%
Downside
11.3%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 54
EdgeCatalyst-Driven — Earnings in 27d with 4/4 beat streak
SuitabilityAggressive — Beta 1.43>1.3
Investment implication
The F-path SELL output reflects an overall score of 5.2 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Quality at 8.9) was not enough to lift the adjusted overall above the threshold. Current asymmetry R:R is 3.50 — supplementary context, not the trigger for this path.
The strongest dimensions are Quality at 8.9, Catalyst at 7.0, and Sentiment at 6.6; the weakest are Growth at 2.6, Peer rank at 3.2, and Technical at 3.9. The V9 engine cleared all gates with 1 warning, producing an asymmetric reward-to-risk of 3.50 and an engine sizing output of AVOID.
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.