It’s been a good year for Unwired Planet (UPIP) , and the future appears to remain bright as it continues its recent trend of positive performance. Equities.com includes Unwired Planet as one of its Small-Cap Stars, and many market analysts expect the growing mobile tech company to finish 2014 strong.
2014 a Good Year for Unwired Planet Thus Far
Unwired Planet jumped out of the gates at the beginning of 2014, gaining 5 percent in just the first two weeks with year-to-date growth currently at 63.77 percent. Much of these gains came after Unwired Planet's stock jumped 49 percent on March 21, 2014 upon news of Lenovo’s purchase of 21 Unwired Planet patent families to the tune of $100 million. This portfolio includes 3G and LTE mobile networks and closed on April 17, and it means Lenovo will have access to the purchased portfolio for several years.
The company also announced on June 3 that it has appointed Dallas Clement to its board of directors. Clement previously served as executive vice president and chief financial officer for Cox Automotive, a worldwide auto parts and service provider with an annual revenue of $4.4 billion. The markets reacted positively to the announcement, pumping Unwired Planet’s stock another 11 percent in the four days following the news.
UPIP’s Patent Holdings are Strong as Projected LTE Phone Sales Reach One Billion
Unwired Planet develops technology for mobile Internet access, LTE communications, unified messaging and cloud data. It patents successful and useful developments for future licensing. According Unwired Planet’s website, the company’s revenue-generating activities are divided into four categories: licensing, technology, portfolio development and prosecutions, and licensing enforcement.
The outlook for Unwired Planet’s industry and sector as a whole is strong. 250 million LTE phones were sold in 2013, with sales expected to reach 500 million in 2014 for a one-year sector growth of 200 percent. By 2017, LTE phone sales are anticipated to hit 1 billion. Other LTE technology companies; including Intel (INTC) , Mediatek, and Samsung (SSNLF) ; are all involved in LTE development, supporting current market expansion predictions.
Unwired Planet still holds more than 2,500 issued and pending patents for future acquisitions.
These patents represent Unwired Planet’s continuing source of future revenue. Since early March, Unwired Planet has been involved in ongoing litigation filed against Google over the protection of three existing Unwired patents. The Patent Trial and Appeal Board is expected to have a final decision by the end of April 2015; this decision is expected to limit Google’s ability to challenge the validity of Unwired Planet’s existing and pending patents.
Positive Short-Term and Long-Term Outlook
The outlook for next five years is strong, with industry growth projections for earnings reaching 18.96 percent. Unwired Planet’s sector is anticipated to grow 17.22 percent, and the company itself by 20 percent.
It has maintained a Zacks Rank #2, categorizing it as a stock to buy with expected growth of around 18 percent over the next one to three months. Nasdaq analysts are forecasting that this year, Unwired Planet will report an earnings increase of 108.11% over last year. Northland Capital released a late-April analysis, giving Unwired a rating of Outperform and a price target of $4.
Unwired Planet is among Equities.com’s Small-Cap Stars.We've compiled data on dozens of fundamental metrics across hundreds of stocks to find those small-cap companies that are in the best position to succeed moving forward based on the factors previously successful small-cap companies had in common. Unwired Planet performed particularly well in relation to its industry in many factors including HiLo risk, price-to-sales ratio, and non-cash WC.
HiLo risk measures a company’s volatility relative to market movement; a beta of more than 1 suggests a company reports yields in positive sector movement above a one-to-one ratio. Companies such as Unwired Planet require some trading action before they pick up, at which point they tend to gain strength and take off.
Price-to-sales ratio (P/S) is the premium that an investor pays on a sales, and Unwired Planet showed a higher premium than industry average. While it might seem counter-intuitive to seek out a high ratio here (particularly for a traditional value investor), it can also be indicative of investors expecting growth in the stock.
Non-cash WC is found by taking all the current assets of the company, minus cash, and subtracting the current liabilities. It’s indicative of the non-cash assets of the company that can be accessed immediately. Unwired Planet has reported a strong backbone of assets as a percentage of revenue, showing it should be well situated to take advantage of opportunities as they arise.
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