On Thursday, Impinj Inc (NASDAQ:PI) saw its price target increased by Canaccord Genuity from $130.00 to $150.00, while the firm kept a Buy rating on the stock. The adjustment follows Impinj's announcement of a settlement and patent cross-licensing agreement with NXP (NASDAQ:NXPI), which concludes all outstanding litigation. This agreement is seen as a significant win for Impinj, reinforcing the company's intellectual property (IP) strength in the RAIN RFID market.
The analyst from Canaccord Genuity believes that this deal will lead to high-margin annual recurring licensing revenue for Impinj, as well as reduce legal expenses, enhancing the company's financial leverage. Furthermore, the settlement positions Impinj to continue leading in the RAIN RFID space, with the potential for more deals that could bring additional growth if competitors join this expanding market.
Impinj is expected to provide more details on the financial impact of the NXP agreement when it reports its March-quarter results. The analyst anticipates that the deal will contribute positively to Impinj's financial performance, although the specifics will be clearer once the company discloses how it will account for the deal.
The firm's confidence in the long-term adoption of RAIN RFID technology remains high, with expectations of strong growth across various sectors, including retail, supply chain and logistics, automotive, aviation, healthcare, and more. The current estimates for 2024 may be conservative, considering Impinj's robust pipeline and the potential for an inventory rebound, yet the analyst has chosen a cautious approach, especially regarding the retail market, and has not yet factored in the NXP licensing agreement into their model.
Canaccord Genuity asserts that the long-term growth opportunity for the RAIN RFID market is substantial, with current penetration estimated at around 1% of its total addressable market (TAM). The analyst foresees a positive setup for Impinj's stock in 2024, with expectations of growth reaccelerating throughout the year.
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