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Up 41% YTD, How Much Higher Can This Russell 2000 Stock Rise?
Haptic technology is revolutionizing digital experiences, with touchable technology booming in smartphones, gaming devices, and more. Its impact spans automotive, information and communication technology, and healthcare. The global haptic technology market is poised to hit $7.3 billion by the decade’s end, expanding at a compound annual growth rate of 13.6%.
Immersion Corporation (IMMR), a Russell 2000 Index (RUT) component, is at the forefront of this sensory revolution. It delivers innovations blurring the line between the digital world and reality, with over 3 billion devices already using its technology. The touch-tech firm has been turning heads, with its stock jumping 41.3% since the year began - crushing the iShares Russell 2000 ETF’s (IWM)1.4% returns, and even outpacing the S&P 500 Index’s ($SPX)12.1% gains over the same time frame.
Despite these impressive returns, IMMR stock still looks like a steal compared to its historical average valuation, with more upside potential in store. Let's have a closer look.
About Immersion Stock
Incorporated in 1993, Florida-based Immersion Corporation (IMMR) is a pioneer in haptic tech, bringing the sense of touch to digital experiences across North America, Europe, and Asia. With a market cap of $319.2 million, it is making waves in mobility, gaming, automotive, VR/AR, wearables, and the Internet of Things (IoT). It does not just create – it innovates, designs, develops, and licenses the tactile tech that’s transforming the digital world.
If the stock seems a bit heftier in size than the average RUT component, that’s because shares of Immersion have surged 27% over the past 52 weeks and a stunning 54.2% over the past six months.
Interestingly, Immersion stands out by rewarding shareholders with dividends – a relatively rare move for a microcap. In May, the company announced a $0.045 per share quarterly dividend, payable to its shareholders on July 26. With an annualized dividend of $0.18, Immersion’s 1.8% yield outshines the sector median, enhancing its appeal to income-focused investors. Additionally, a low dividend payout ratio of 9.78% leaves plenty of room for growth and potential dividend hikes.
In terms of valuation, Immersion stock trades at 8.45 times forward earnings, which is lower than its tech industry peers and its own five-year average of 20.95x.
Immersion’s Solid Q1 Earnings Results
Immersion stock gained 24% over five trading sessions after the touch-tech company reported robust Q1 earnings results on May 8. Revenue of $43.9 million, up a whopping 519.8% year over year, beat projections by 75.9%. Its net income per share climbed 136% to $0.59 from $0.25, matching estimates and highlighting both its operational prowess and the growing demand for advanced haptic technologies.
The company boasts a robust balance sheet with $179.1 million in cash and current investments as of March 31, and zero debt, offering shareholders full access to its residual book value.
Immersion Secures Key Partnerships
On May 22, Immersion renewed its crucial patent license agreement with Samsung Electronics Co., ensuring continued access to Immersion's patents for Samsung and its affiliates. This renewal eliminates a significant risk, given Samsung's substantial contribution to Immersion's revenue, reinforcing the company's financial stability and brightening its future outlook.
Immersion's business operations center around a vast portfolio of haptic technology patents, generating per-unit royalties from other big names like Nintendo(NTDOY) and Meta(META). The February agreement with Meta is particularly noteworthy, providing a fresh revenue stream from a VR leader and compensating for the loss of royalties from Microsoft(MSFT). Immersion's strategic partnerships and cutting-edge tech position it as a key player in the evolving digital landscape.
Analysts tracking Immersion predict double-digit EPS growth of 12.5% to $1.17 in fiscal 2024.
What Do Analysts Expect for Immersion Stock?
Immersion has a consensus “Strong Buy” rating overall. Out of just two analysts covering the stock, one recommends a “Strong Buy,” and the other advises a “Moderate Buy.”
The Street-high target price of $20 for Immersion, newly raised by Craig-Hallum in late May, implies that IMMR stock could double from current levels.
On the date of publication, Sristi Suman Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
