Immersion Corporation

IMMR Details

Immersion Corporation (NASDAQ: IMMR) develops, licenses, and designs haptic technologies that allow individuals to utilize their sense of touch to control digital products, including smartphones, consumer electronics, gaming consoles, and vehicle interfaces. It operates in Asia, North America, and Europe and earns money from royalty and licence payments, development contracts, and service fees.

Latest News:

• Recent Collaboration: On February 23, 2022, IMMR announced the partnership with Nissha Co., Ltd. a global supplier of touch sensors, decorative film and molded parts, to integrate its haptics technology with automotive interface solutions. Immersion's Active Sensing technology and patents will be licensed to Nissha under the terms of the agreement.
• Licence agreement with Duck-il: On February 22, 2022, IMMR had signed a licensing agreement with Duck-il, a Korean automotive supplier, to use its technology in-vehicle interfaces. Immersion technology is required to provide high-definition tactile user experiences in the car.

FY21 Results:

• Double-Digit Growth in Topline: IMMR reported YoY growth of 15.21% in revenues to USD 35.09 million in FY21 (ended December 31, 2021) compared to USD 30.46 million in FY20, driven by growth in Per-Unit royalty revenue.
• Surge in Bottomline: Its net income increased to USD 12.48 million during FY21 from USD 5.40 million during FY20.
• Strong Balance Sheet: The company's cash and cash equivalents (including short-term investments) were USD 137.92 million as of December 31, 2021, with no outstanding debt.

Key Risk:

• Input Risk: Shortages of electronic components like integrated circuits, which are required to manufacture its products (as they were during the COVID-19 pandemic), may result in lower production and sales, affecting the overall royalties payable to the company.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation:

IMMR's stock price has fallen 39.47% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 4.46 to USD 11.68. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 6.43.

Considering the significant correction in the stock price, inorganic growth initiatives, strong balance sheet, solid profitability margins, positive outlook, associated risks, and current valuation. We recommend a "Speculative Buy" rating on the stock at the current price of USD 5.2901, down 0.56% as of March 01, 2022, at 10:57 AM ET.

Three-Year Technical Price Chart (as on March 01, 2022, at 10:57 AM ET). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.