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Cowen & Co is out with a superb call on Tessera (NASDAQ:TSRA), saying that given the preliminary nature of the ongoing patent review process, they have been shocked by brutal negative reaction in TSRA's stock price in reaction to the recent ITC decision to stay TSRA's infringement case against a slew of "wireless defendants".

Judging from the reaction in the stock, in Cowen's view the market is now discounting a very, very, very, very unlikely scenario where not only TSRA patents are ultimately overturned but that existing licensees (both DRAM and Wireless) breach contracts and for some reason push back and decide not to pay TSRA. They do not believe there is any basis for this. Licensees are quite knowledgeable on patent issues and surely know that we're not even close to any patents being overturned.

Interestingly, but not surprisingly given their initial objection to the "stay" order, the ITC's own staff attorneys filed a petion for review of the stay order which they continue to assert was incorrectly and unfairly granted by the ALJ. Note that the ITC ALJ is new to the ITC, was assigned to the TSRA case late last year and has no/little patent experience.

The ongoing patent reviews are far from final. While investors read the initial ITC decision to stay and concluded that the patent reviews were going negatively for TSRA and would be concluded soon, the firm does believe this is the case.

Thinks that the stock has been unfairly and unjustifiably sold off. Reiterates 'Outperform'.

Notablecalls: So, ITC's own staff has filed a petition for review of the stay order? ITC's own staff is against this stupid order imposed by Judge Essex! This judge was assigned to the case back in Oct 2007 and seems somewhat clueless. This makes it very likely the stay will be lifted.

This means the stock is way oversold. There is NO reason TSRA shouldn't be a $20 stock!

Buy it today and buy early.

Actionable Call by Cowen's Raj Seth.

Source: Tessera Selloff Way Overdone - Cowen