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Tessera Technologies (TSRA) Shares Attain a 52-Week High
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Shares of technology company Tessera Technologies hit a new 52-week high of $42.90 on Dec 12, and eventually closed at $42.58. The company has delivered a solid one-year return of about 32.0% and year-to-date return of roughly 41.9%. Average volume of shares traded over the last three months was approximately 404K.
Shares of Tessera have been treading higher on a year-to-date basis. The stock has returned 42.95% compared with the Zacks Electronic Manufacturing industry’s gain of 26.82%.
What is Driving Tessera?
Tessera provides back-end technology for semiconductor manufacturing. The company is refocusing on the higher-margin, higher-risk licensing model, so a host of patents, new technologies and customer wins are driving growth. The product portfolio has also been revamped to target the mobile segment, which is boosting top-line growth.
Moreover, the company gained momentum from its strong fundamentals and better-than-expected third-quarter results released on Nov 1. Since then, the stock has moved up more than 16%.
Tessera’s third-quarter earnings of 53 cents exceeded the Zacks Consensus Estimate by 7 cents. The company’s top line was in line with the Zacks Consensus Estimate of $62.4 million and came within its own guidance range, backed by strong recurring revenues.
The price appreciation can also be attributed to recent buyout of DTS Inc., a leading audio solutions provider for $850 million. The deal is expected to be immediately accretive to its earnings per share and free cash flow. It is also expected that the combined entity will realize $15 million in annualized cost synergies within 12 to 18 months of the close of transaction.
The acquisition will make Tessera one of the leading product and technology licensing companies globally. Tessera expects the combined company to generate pro forma revenues of around $450 million in 2016, half of which will come from product licensing.
Also, Tessera has an impressive record of returning cash to shareholders through dividends and share buybacks. In the recently reported quarter, the company spent $9.7 million on cash dividends and $6.0 million to repurchase 0.2 million shares.
The price appreciation can also be attributed to continued growth in the company’s FotoNation imaging group due to recent product additions. These positive developments and its premium imaging technology suggest that business will grow significantly in the mobile and adjacent markets.The company has also intensified its Invensas and IP licensing efforts, and is currently working with a number of semiconductor manufacturers and OSATs to enhance its portfolio of advanced packaging and interconnect technologies that encompass ZiBond, Direct Bond Interface (DBI) bonding technologies and BVA.
Moreover, the company recorded a positive earnings surprise of 15.22% in the reported quarter. The stock also delivered an average earnings surprise of nearly 12.14% over the trailing four quarters. This Zacks Rank #2 (Buy) stock has a market cap of approximately $2.07 billion and a long-term expected earnings growth rate of 20.0%.
Cognex Corporation delivered a positive earnings surprise of 24.92% in the trailing four quarters.
Itron, Inc. delivered a positive earnings surprise of 30.55%, on average, in the trailing four quarters.
Fortive Corporation delivered a positive earnings surprise of 8.42% in the trailing four quarters.
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Tessera Technologies (TSRA) Shares Attain a 52-Week High
Shares of technology company Tessera Technologies hit a new 52-week high of $42.90 on Dec 12, and eventually closed at $42.58. The company has delivered a solid one-year return of about 32.0% and year-to-date return of roughly 41.9%. Average volume of shares traded over the last three months was approximately 404K.
Shares of Tessera have been treading higher on a year-to-date basis. The stock has returned 42.95% compared with the Zacks Electronic Manufacturing industry’s gain of 26.82%.
What is Driving Tessera?
Tessera provides back-end technology for semiconductor manufacturing. The company is refocusing on the higher-margin, higher-risk licensing model, so a host of patents, new technologies and customer wins are driving growth. The product portfolio has also been revamped to target the mobile segment, which is boosting top-line growth.
Moreover, the company gained momentum from its strong fundamentals and better-than-expected third-quarter results released on Nov 1. Since then, the stock has moved up more than 16%.
Tessera’s third-quarter earnings of 53 cents exceeded the Zacks Consensus Estimate by 7 cents. The company’s top line was in line with the Zacks Consensus Estimate of $62.4 million and came within its own guidance range, backed by strong recurring revenues.
The price appreciation can also be attributed to recent buyout of DTS Inc., a leading audio solutions provider for $850 million. The deal is expected to be immediately accretive to its earnings per share and free cash flow. It is also expected that the combined entity will realize $15 million in annualized cost synergies within 12 to 18 months of the close of transaction.
The acquisition will make Tessera one of the leading product and technology licensing companies globally. Tessera expects the combined company to generate pro forma revenues of around $450 million in 2016, half of which will come from product licensing.
Also, Tessera has an impressive record of returning cash to shareholders through dividends and share buybacks. In the recently reported quarter, the company spent $9.7 million on cash dividends and $6.0 million to repurchase 0.2 million shares.
The price appreciation can also be attributed to continued growth in the company’s FotoNation imaging group due to recent product additions. These positive developments and its premium imaging technology suggest that business will grow significantly in the mobile and adjacent markets.The company has also intensified its Invensas and IP licensing efforts, and is currently working with a number of semiconductor manufacturers and OSATs to enhance its portfolio of advanced packaging and interconnect technologies that encompass ZiBond, Direct Bond Interface (DBI) bonding technologies and BVA.
Moreover, the company recorded a positive earnings surprise of 15.22% in the reported quarter. The stock also delivered an average earnings surprise of nearly 12.14% over the trailing four quarters. This Zacks Rank #2 (Buy) stock has a market cap of approximately $2.07 billion and a long-term expected earnings growth rate of 20.0%.
TESSERA HLDG CP Price and Consensus
TESSERA HLDG CP Price and Consensus | TESSERA HLDG CP Quote
Zacks Rank & Other Stocks to Consider
Currently, Tessera has a Zacks Rank #2 (Buy). Some other favorably placed stocks in the industry are Cognex Corporation (CGNX - Free Report) and Itron, Inc. (ITRI - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Fortive Corporation (FTV - Free Report) , carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cognex Corporation delivered a positive earnings surprise of 24.92% in the trailing four quarters.
Itron, Inc. delivered a positive earnings surprise of 30.55%, on average, in the trailing four quarters.
Fortive Corporation delivered a positive earnings surprise of 8.42% in the trailing four quarters.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>