According to the calculations of one analyst anyway. Currency considerations and royalty rates provide the thrust of nine-pages of company and share price scrutiny by Liberum's respected chief technology number cruncher Janardan Menon. The end result is a 33% hike to his own share price target for Imagination Technologies (IMG) from 245p at the start of September to 325p now.
That alone may not account for today's 7% jump in the graphics chip designer's shares, to 273p - we strongly suspect a the ultimate takeover of the company grows in likelihood by the day (as Shares has flagged before), and perhaps wider investors are coming to the same conclusion.
The currency issue has been covered before in Shares, we explained in June how Imagination's earnings estimates could hike by 20% for every 10% Sterling decline versus the dollar.
Over the past five or six weeks Sterling has lost about 9% against the dollar, and that's beyond the flash crash post June's Brexit vote win.
But the royalties case also appears to be strengthening, thanks to 'higher assumptions for iPhone related royalties,' says the Liberum analyst.
'We had previously modelled iPhone royalties to be down this year as per company guidance, while Mediatek and Spreadtrum royalties were expected to be up,' explains Menon today.
But iPhone 7 sales trends so far suggest that this assumption is too cautious so, while it is still early days, 'trends so far suggest that iPhone 7 sales are likely to be at least as strong, if not better than the iPhone 6,' he predicts.
'Imagination is trading at an EV/sales of 4.8-times, a 50% discount to its peer group,' states Menon. He fully anticipates that gap narrowing as the business improves now that the loss-making Pure profit drain is gone, while the analyst also agrees with Shares on takeover chances. 'We also believe it has broad appeal as an M&A target.'
