Smart home stock Alarm.com rose Friday after the company settled a patent licensing case with rival Vivint.
Tysons, Va.-based Alarm and Provo, Utah-based Vivint jointly announced late Thursday that they have resolved all outstanding litigation between them. Also, Alarm said it will license its intellectual property portfolio to Vivint.
While financial terms were not disclosed, the settlement removes an overhang from Alarm stock, Raymond James analyst Adam Tindle said in a client note. He rates Alarm stock as strong buy.
On the stock market today, Alarm stock rose 2.3% to close at 64.62.
Smart Home Stock Is Recent Breakout
"While difficult to quantify without disclosures, we do note that Vivint's prior refusal to pay created a $6 million-per-quarter headwind to SaaS (software-as-a-service) revenue beginning in fourth quarter 2022," Tindle said. "Additionally, this came with very little cost given the licensing nature of the agreement, meaning EBITDA (earnings before interest, taxes, depreciation and amortization) was also impacted by about $6 million per quarter."
Alarm provides an online platform for managing smart homes and other connected properties. Its platform covers security, energy management, video surveillance and other technologies.
Vivint is a unit of NRG Energy and serves over 2 million customers in the U.S. NRG bought Vivint in March. NRG stock dipped 0.3% to 51.70 on Friday.
On Dec. 13, Alarm stock broke out of a cup-with-handle base at a buy point of 59.62, according to IBD MarketSmith charts.
Alarm stock ranks No. 13 out of 45 stocks in IBD's Security/Safety industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 84 out of 99.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
