Can Tessera (TSRA) Surprise This Earnings Season? - Analyst Blog

Tessera Technologies Inc. TSRA is set to report first-quarter fiscal 2014 results on May 6. Last quarter, it posted in-line results. Let's see how things are shaping up for this announcement.

Growth Factors This Past Quarter

Tessera Technologies' fourth-quarter earnings of 8 cents were in line with the Zacks Consensus Estimate due to higher revenues. Revenues were up 51.2% sequentially and 18.5% year over year. The solid growth was driven by strong performance in both the Intellectual Property and DigitalOptics segments.

Intellectual Property revenues increased year over year, primarily due to increased royalty revenues from SK Hynix, Inc. and greater episodic revenues. On the other hand, the year-over-year increase in the DigitalOptics segment was attributable to a one-time license fee related to a legacy DOC license agreement.

Tessera's DOC portfolio leads the semiconductor manufacturing technology category, ahead of companies such as Samsung, SanDisk SNDK, Foxconn and Intel INTC. 

Moreover, the company's recent litigation settlement agreements with Renesas Electronics Corporation, Renesas Electronics America, Inc. and Qualcomm Technologies, Inc. will make Tessera free of litigation expenses in the future.

The company is on the right track and the fact that the target market is fast-growing is an added bonus.

Earnings Whispers?

Our proven model does not conclusively show that Tessera Technologies will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 50 cents. Hence, the difference is 0.00%.

Zacks Rank: Tessera Technologies' Zacks Rank #3 (Hold), when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies, which you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

• Inteliquent, Inc. IQNT, with Earnings ESP of +4.00% and a Zacks Rank #1 (Strong Buy)
• Infinera Corp. INFN with Earnings ESP of +33.33% and a Zacks Rank #2 (Buy)
• BlackBerry Ltd. BBRY with Earnings ESP of +21.43% and a Zacks Rank #2