Imagination Technologies share price boosted by return to profit: Here's what City analysts say about full-year results, Apple dispute and sale talks

 
Lynsey Barber
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Imagination put itself up for sale after a dispute with Apple (Source: Getty)

Imagination Technologies stock was given a boost this morning after it revealed a return to profit.

Shares were up more than eight per cent in early trading for the firm which is in the midst of selling itself, though there was no update on the sales process. It updated investors a fortnight ago saying it had entered formal sale talks with potential buyers.

Heres what analysts in the City make of the latest figures.

"Special situation territory"

N+1 Singer

"While the results themselves are slightly ahead of our expectations, reflecting the significant restructuring undertaken in the year, events post the year end have taken over.

"There is no further update on the dispute with Apple within today’s update and no indication of the level at which the group has received interest from potential bidders for the whole group.

"The outlook for licence revenue in FY’18 is said to be strong, but we expect potential customers to wary in light of the uncertain outlook for the group. We continue to believe that the PowerVR IP [intellectual property] will be attractive to a number of potential bidders, but as a primarily IP based sale, it is very difficult to quantify the value. We would expect a potential offer to be broadly in the 100p – 150p range. The stock remains firmly in special situation territory, but given the likelihood of an offer emerging, stay at Hold."

"Well above expectations"

Liberum's Janardan Menon

"Imagination Technologies has reported full-year results well above our forecasts and market expectations. The strength came mainly from licensing, which rose 82 per cent year-on-year The company continues to see good demand for all three businesses - PowerVR, MIPS and Ensigma.

"These strong results and continuing demand from major semiconductor companies is likely to be positive for the sale process currently underway. We expect multiple companies to be interested in buying Imagination, providing potential upside to investors from current levels."

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