Analyst upgrades and the settlement of a long-standing patent dispute with Verizon Communication sent shares of TiVo Inc.(NASDAQ:TIVO to more than 4-month high of $10.17 on Tuesday. The stock has risen over about 7% in the past two trading sessions.
Yesterday, Barton Crockett of Lazard Capital raised the rating on the stock to Buy from Neutral while he also set $14 as a price target. Barclays Capital maintained its Overweight rating on the stock with a price target of $11.
The upgrades were a result of the settlement with Verizon, wherein the digital video recorder maker said that it would get $250 million from the network carrier and monthly license fees from it.
The payments would be made partly upfront and partly in quarterly instalments. The license fees would be paid by Verizon till July 2018.
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The company also said that they were looking at more options of developing technologies together for Verizon in its video streaming business.
According to Crockett, the agreement with Verizon also paved the way for other such agreements with companies such as Cisco Systems and Motorola Mobility leading to more pay-offs.
"Verizon settlement has made us more optimistic that TiVo can extract substantial additional value from Motorola, a Verizon supplier that is being sued by TiVo. Potential for a settlement should peak into the likely start of a Motorola trial in the spring, and add $2 to an SOTP for TiVo that, ex-Motorola, we put at $12," he said.
Barclays said, “This settlement takes the company’s pro forma cash balance to ~$642m. This accounts for 84% of the company’s enterprise value at present.