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- Shares of Rovi Corporation (NASDAQ: ROVI) have declined more than 53 percent year to date.
- JP Morgan’s Sterling Auty upgraded the rating on Rovi from Neutral to Overweight, while maintaining the price target at $23.
- While the decline in the share price have made the risk/reward balance more attractive, Auty expects the share price to double or even triple over the next 12-15 months.
“While there remains risk to the timing and headlines coming out of the Big 4 contract renewals, we believe over the next 12-15 months the stock has the potential to more than double and perhaps close to triple on what we expect to be eventual positive outcomes in large contract renewals,” Auty elaborated.
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The current share price reflects an overly pessimistic view that the Big 4 renewals would not occur and the IP business would shrink by 73 percent.
Auty believes that such a scenario is unlikely, despite the unfavorable judgement related to the Netflix, Inc. (NASDAQ: NFLX) litigation.
According to the JP Morgan report, “The negative view on ROVI relies heavily on companies’ ability to use the recent Alice 101 Supreme Court decision to avoid licensing ROVI’s patent portfolio.”
Although the Netflix judgement has led to the shutting down of patents under Alice 101, Auty believes that there is a lot of room for Rovi to move ahead under appeal and that the size of the company’s patent portfolio “holds the potential for many other patents to be deemed valid and applicable for IP licensing enforcement.”
Auty does not expect most IP licensing customers to challenge the company’s position or require the use of litigation over the next two years.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.