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Strength Seen in InterDigital (IDCC): Can Its 10.3% Jump Turn into More Strength?

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InterDigital (IDCC - Free Report) shares rallied 10.3% in the last trading session to close at $69.37. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 26.5% gain over the past four weeks.

InterDigital recently issued preliminary results for the fourth quarter of 2022. The company expects net income for the fourth quarter of 2022 to be approximately $28 million or 93 cents per share, in line with the Zacks Consensus Estimate and 23 cents higher than the prior-year quarter’s levels. IDCC projects net non-operating income at $1 million.

The company expects fourth-quarter revenues to be approximately $114 million, higher than the previous expectation of $98-$102 million. It includes recurring revenues of $101 million. The higher revenue expectations are mainly induced by new agreements signed in the second half of the quarter. The revenue expectation is likely to beat the Zacks Consensus Estimate of $101 million.

This wireless research and development company is expected to post quarterly earnings of $0.56 per share in its upcoming report, which represents a year-over-year change of -20%. Revenues are expected to be $101 million, down 9.7% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For InterDigital, the consensus EPS estimate for the quarter has been revised 4% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on IDCC going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

InterDigital is a member of the Zacks Wireless Equipment industry. One other stock in the same industry, ViaSat (VSAT - Free Report) , finished the last trading session 1.3% higher at $36.36. VSAT has returned 13.1% over the past month.

ViaSat's consensus EPS estimate for the upcoming report has changed -25.8% over the past month to -$0.35. Compared to the company's year-ago EPS, this represents a change of -288.9%. ViaSat currently boasts a Zacks Rank of #5 (Strong Sell).

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