Craig-Hallum Bullish On Immersion's New Interim CEO

Haptic technology developer Immersion Corporation IMMR is now led by a competent interim CEO who boasts the necessary experience to oversee new deals, according to Craig-Hallum Capital Group. 

The Analyst

Analyst Anthony Stoss upgraded Immersion from Hold to Buy with a price target lifted from $14 to $15.

The Thesis

Immersion's decision to name Tom Lacey as interim CEO and board member in late August is encouraging, as the executive has a long history of working with Samsung, Stoss said in the upgrade note. (See his track record here.) 

At Xperi Corp XPER, Lacey closed multiple license agreements with Samsung and built a relationship with executives at the South Korean company. He should be able to lead Immersion to close a new license deal with Samsung "sooner rather than later," Stoss said. 

"As a reminder, on a normalized basis, once IMMR has signed all the major agreements AAPL, Samsung and all of the major Chinese handset makers], we believe the company might be able to earn $1.50 in normalized ... EPS per year."  

On paper, this equates to a value of $17 per share, although a discount is warranted due to an ongoing lawsuit with Samsung, the analyst said. 

Aside from Samsung, Immersion continues to win new automotive deals — such as agreements with Stanley Electric, Calsonic and Toyodenso — which are likely heavily royalty-based, Stoss said. The royalty revenue represents only a small impact to 2019 financials, but should ramp in the following years, he said. 

Price Action

Immersion shares were rallying 13.43 percent to $11.57 at the time of publication Wednesday morning. 

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