Immersion Corporation IMMR is expected to report third-quarter 2024 results this week.
The Zacks Consensus Estimate for revenues is pegged at $10.13 million, suggesting a 6.9% year-over-year increase. The consensus mark for earnings stands at 15 cents per share, unchanged over the past 60 days, implying an impressive 87.5% surge from the year-ago figure of 8 cents.
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As a leading developer and licensor of touch feedback (haptic) technology, Immersion has shown a consistent performance in surpassing earnings expectations. The company’s earnings have topped the Zacks Consensus Estimate three times in the past four quarters, with an average surprise of 50.6%.
Immersion Corporation Price and EPS Surprise
Immersion Corporation price-eps-surprise | Immersion Corporation Quote
Factors Shaping IMMR’s Upcoming Results
Immersion’s third-quarter performance is likely to have benefited from the rising demand for its haptic technology across key sectors such as gaming, automotive and consumer electronics. The push for enhanced user experiences, propelled by new product launches and strategic partnerships, is likely to have bolstered sales of its patented solutions.
The increasing adoption of virtual reality (VR) and augmented reality (AR) technologies, which rely on haptic feedback for immersive experiences, may have driven demand for Immersion’s offerings. Revenue growth in the to-be-reported quarter is also expected to have been supported by expanded licensing agreements and royalty income from prominent OEMs (original equipment manufacturers) in these emerging tech markets.
Immersion’s strategic initiatives aimed at broadening its product range and entering new markets, coupled with efficient cost management, could have enhanced operational efficiency and improved profit margins. The company’s focus on expanding its intellectual property (IP) portfolio and securing new licensing deals is likely to have played a pivotal role in boosting revenue and earnings growth in the third quarter.
Immersion’s Price Performance & Valuation
Year to date (YTD), shares of Immersion have soared 22.4%, outperforming the Zacks Computer - Peripheral Equipment industry’s decline of 35.7%. The IMMR stock has also outperformed other players in the space, including Logitech LOGI, TransAct Technologies TACT and Identiv INVE, which have registered a decline of 18.7%, 42.1% and 54.2%, respectively, YTD.
YTD Price Return Performance
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Let’s look at the value Immersion offers investors at the current levels. IMMR is trading at a premium with a forward 12-month P/S of 6.15X compared with the industry’s 0.53X, reflecting a stretched valuation.
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Investment Consideration for Immersion
Immersion’s technology is integral to many advanced haptic applications, positioning the company to capture growing demand across diverse markets. According to a Fortune Business Insights report, the global haptic technology market is expected to witness a CAGR of 13.6%, expanding from $2.99 billion in 2023 to $7.31 billion by 2030.
With a robust IP portfolio encompassing numerous patents, Immersion maintains a competitive advantage and generates substantial licensing revenues. The company’s technology is widely licensed, ensuring a consistent income stream that supports growth and innovation.
Immersion’s strategic push to broaden its product range into new sectors, such as medical devices and industrial applications, underscores its versatility. This diversification reduces reliance on any single industry and opens up multiple revenue channels.
Strong partnerships also bolster Immersion’s growth prospects. Over the past year, it has secured agreements with top smartphone manufacturers, gaming firms and automotive leaders, highlighting the widespread adoption of its technology. These partnerships validate Immersion’s product quality and secure long-term revenue potential.
The company boasts more than 15 award-winning designs and products used in more than three billion devices globally, with more than 150 licensed customers contributing to its expansive reach.
Conclusion: Hold IMMR Stock Ahead of Q3 Earnings
While Immersion’s stock has shown solid performance YTD and maintains strong growth drivers, holding the stock ahead of the Q3 earnings release could be a prudent strategy. This Zacks Rank #3 (Hold) company’s strong positioning in key markets, strategic partnerships and robust IP portfolio support a positive long-term outlook despite its premium valuation. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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