In a January 30 research note, Roth MKM analyst Suji Desilva reiterated a Buy rating on visual processing technology developer Pixelworks Inc. (PXLW:NASDAQ) with a new US$3 price target. The company recently signed its first major Hollywood studio licensing deal for its TrueCut motion grading platform, representing a high-margin recurring revenue opportunity.
Pixelworks announced that Walt Disney Studios has adopted TrueCut motion grading on a multi-year basis. The technology will be applied to select movie titles and home entertainment devices to preserve the creative intent across formats. A Disney executive highlighted TrueCut's ability to give filmmakers more creative flexibility.
The analyst sees the Disney agreement as a breakthrough for TrueCut, making it more likely other major studios follow suit. As a software platform, TrueCut will generate high-margin licensing and potential per-device royalty revenues. This starts to diversify Pixelworks away from its reliance on the mobile processor business.
"We believe TrueCut wins represent a high-margin licensing/royalty opportunity for the company, as well as an incremental diversifying revenue stream versus the company’s core mobile device traction. We raise our price target from US$2 to US$3 and maintain our Buy rating," Desilva said.
Their new US$3 price target implies over 100% upside for the stock currently trading around US$1.50.
| Want to be the first to know about interesting Technology investment ideas? Sign up to receive the FREE Streetwise Reports' newsletter. | Subscribe |
Important Disclosures:
- This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.
For additional disclosures, please click here.
Disclosures for Roth MKM, Pixelworks Inc., January 30, 2024
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Disclosures: ROTH makes a market in shares of Pixelworks, Inc. and as such, buys and sells from customers on a principal basis. Shares of Pixelworks, Inc. may be subject to the Securities and Exchange Commission's Penny Stock Rules, which may set forth sales practice requirements for certain low-priced securities.
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months. The material, information and facts discussed in this report other than the information regarding ROTH Capital Partners, LLC and its affiliates, are from sources believed to be reliable, but are in no way guaranteed to be complete or accurate. This report should not be used as a complete analysis of the company, industry or security discussed in the report. Additional information is available upon request. This is not, however, an offer or solicitation of the securities discussed. Any opinions or estimates in this report are subject to change without notice. An investment in the stock may involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Additionally, an investment in the stock may involve a high degree of risk and may not be suitable for all investors. No part of this report may be reproduced in any form without the express written permission of ROTH. Copyright 2024. Member: FINRA/SIPC.
