Imagination Technologies saw its shares jump as much as nine per cent yesterday after the graphics chip maker – whose products are used in Apple’s new iPhone 6 – said it was encouraged by levels of licencing activity since May.
Excitement following the record 4m pre-orders for the iPhone 6 over the weekend sent Imagination’s shares up five per cent, closing at 199.5p, while rival supplier Arm Holdings also saw a 2.23 per cent boost, its shares closing at 940.5p.
“We continue to see good progress being made across our three main IP product families, multimedia, processors and communications,” said Imagination chief executive Hossein Yassaie.
“The three IP families and the platforms they enable are increasingly seen as a strong and relevant proposition for the existing and emerging opportunities by many of our customers,” he added.
Overall, Imagination said it expected full-year revenue growth of around 10 per cent, with a stronger performance in the second half due to a number of new products shipping in that period.
“We still think the current valuation [17-18 times 2016 estimated price-to-earnings] misrepresents the underlying fundamentals and the opportunities,” said Jefferies analyst Lee Simpson.
“We see Imagination as an attractive investment opportunity and thus maintain our buy and price target of 300p [based on a forward PE multiple of 25-30 times].”
Imagination also cautioned on the impact of sterling during the period, which it said had impacted both licensing and royalty revenue.
“Given the recent volatility of sterling, it is difficult to predict the likely impact of this factor for the financial year to April 2015,” said Imagination.
“However, we continue to be active in hedging some of our exposure to currency movements.”