Immersion Corporation

IMMR Details

Immersion Corporation (NASDAQ: IMMR) creates, licenses, and produces haptic technologies that allow users to manage digital items such as smartphones, consumer electronics, game consoles, and car interfaces using their sense of touch. It makes money via royalties and license payments, development contracts, and service fees in Asia, North America, and Europe.

Latest News:

• Recent Collaboration: IMMR announced a collaboration with Nissha Co., Ltd., a global producer of touch sensors, decorative film, and moulded parts, on February 23, 2022, to merge its haptics technology with automobile interface solutions. Under the terms of the agreement, IMMR's Active Sensing technology and patents will be licensed to Nissha.

FY21 Results:

• Boost in Topline: Revenues increased 15.21% year over year to USD 35.09 million in FY21 (ended December 31, 2021) from USD 30.46 million in FY20, owing to an increase in Per-Unit royalty revenue.
• Rise in Bottomline: Its net income grew to USD 12.48 million in FY21, up from USD 5.40 million the previous year.
• Debt-Free Balance Sheet: As of December 31, 2021, the company's cash and cash equivalents (including short-term investments) totaled USD 137.92 million, with no outstanding debt.

Key Risk:

• Scarcity of Electronic Components: Shortages of electronic components such as integrated circuits, which are required to create its products (as they were during the COVID-19 epidemic), may result in lower production and sales, impacting the company's overall royalties payable.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 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 37.77% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 4.46 to USD 9.88. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 6.50.

Considering the significant correction in the stock price, strong balance sheet, robust profitability margins, associated risks, and current valuation, we recommend a "Speculative Buy" rating on the stock at the closing price of USD 5.42, up 2.07% as of March 29, 2022.

Three-Year Technical Price Chart (as of March 29, 2022). 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.

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