Needham upgrades Digimarc on ‘strong’ recurring revenue growth

Needham analyst Joshua Reilly upgraded Digimarc to Buy from Hold with a $40 price target following a transfer of coverage. Digimarc has developed a unique platform based on its leadership in watermarking technologies, which offers a compelling return on investment for customers, the analyst tells investors in a research note. The firm expects the company to generate “strong” annual recurring revenue growth over the next half decade “as use cases proliferate across a range of end markets.” Management has transformed Digimarc from a single-product point-solution vendor to a platform offering that sells based on ROI with a compelling margin structure, contends Needham. It sees a number of potential catalysts for the stock, ranging from large commercial customer opportunities with Walmart to increased adoption of plastic recycling in Europe.