We came across a bullish thesis on Immersion Corporation (IMMR) on Substack by PPinvest. In this article, we will summarize the bulls’ thesis on IMMR. Immersion Corporation (IMMR)’s share was trading at $8.65 as of Dec 6th. IMMR’s trailing and forward P/E were 4.82 and 6.98 respectively according to Yahoo Finance.
Two gamers enjoying an immersive experience playing together online via their gaming console.
Immersion Corporation, a leader in haptics technology, licenses software and intellectual property (IP) to enhance touch interactions in digital devices. Its technology powers gaming controllers, automotive interfaces, mobile devices, and VR applications, offering a rich user experience. With a focus on maximizing its existing patent portfolio rather than heavy investment, Immersion has historically generated strong cash flows, making it a niche player with a robust financial foundation.
A transformative move in 2024 saw Immersion acquire 42% of Barnes & Noble Education (BNED), gaining control via board appointments. This $55 million investment has already doubled in market value to $115 million, reflecting the rapid turnaround potential of BNED. Consolidating BNED into Immersion’s financials has significantly bolstered its results, with quarterly revenues surging from $7 million to $99.4 million and profits climbing from $7 million to $28.8 million. Strategic customer agreements with industry giants like Meta, Samsung, and Nintendo have further driven growth.
The company, under activist investor and CEO Eric Singer, has adopted shareholder-focused capital allocation policies. A $50 million share buyback program and dividends returned $15.6 million to shareholders in 2023 while reducing outstanding shares by 3%. With Singer and strategy director William Martin collectively holding a 10% stake, Immersion’s leadership demonstrates alignment with shareholder interests. Both have also invested heavily in BNED, underscoring their confidence in its recovery and long-term value.
Despite its achievements, Immersion remains under the radar. Its stock trades at a modest P/E ratio of 3.2, with a dividend yield of 2.12%, making it highly undervalued. The high short interest in both Immersion and BNED signals potential for a short squeeze, especially if BNED achieves its anticipated turnaround in the upcoming key earnings season. With no analyst coverage or public buzz, Immersion is an “unknown, unclear, unpopular, and undervalued” stock primed for discovery.
The stock’s deep undervaluation, alongside catalysts like BNED’s revival and Immersion’s continued profitability, presents a compelling opportunity. A fair P/E ratio of 22 implies a significant upside, with a bold three-year target price of €70 (+724%), driven by strategic execution and market recognition of its true value.
Immersion Corporation (IMMR) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 14 hedge fund portfolios held IMMR at the end of the third quarter which was 15 in the previous quarter. While we acknowledge the risk and potential of IMMR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than IMMR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.