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TiVo Stock Soars On Initial Comcast Lawsuit Ruling

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Shares of TiVo popped 10% in morning trading Tuesday on news that it earned an early favorable ruling in a patent lawsuit against Comcast (CMCSA - Free Report) . Now, the struggling digital television recording company, which once helped change the industry forever, might be positioned for further positive gains.

The U.S. International Trade Commission made a preliminary ruling on Friday that Comcast violated two TiVo patents. An initial determination was made that Comcast crossed the line regarding Section337—Understanding Investigations Of Intellectual Property Infringement And Other Unfair Practices In Import Trade.

Fellow communications companies ARRIS International plc and Technicolor SA were also implicated in the patent lawsuit.

Cowen analyst Robert Stone wrote in a note to clients that TiVo is undervalued and that the recent U.S. ITC ruling might mean Comcast will settle the patent infringement lawsuit instead of gearing up for a long legal battle.

Piper Jaffray analysts noted that the ruling could prompt the cable giant to renew its business with TiVo. Piper's Michael Olson set an updated TiVo price target of $25.

TiVo’s stock sat as low as $16 per share just over a week ago; it’s up to $18 through morning trading.

TiVo’s Tuesday gains come days after its president and CEO Thomas Carson informed the board that he plans to retire from the position. This change at the top, as well as the patent case, have helped TiVo earn a Zacks Rank #1 (Strong Buy) and a B grade for Momentum in our Style Score system.

Nevertheless, investors should note that, on top of today’s positive movement, Hulu sued Tivo last week claiming that the streaming service doesn’t need to renew an expired licensing agreement with TiVo.

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