NLST Stock Rallies After ITC Patent Action Against MU, SMCI, HPE – Roth Capital Sees Settlement Upside

Roth Capital analyst Suji Desilva cited Samsung’s settlement and SK Hynix’s license as precedents for potential licensing deals.

• NLST stock reached a fresh three-year high after the company launched a new ITC patent infringement action against Micron, Super Micro, HPE and Lenovo.
• Netlist CEO C.K. Hong accused Micron of "unauthorized use" of Netlist technology.
• Roth Capital raised its NLST price target to $15 from $10 and maintained a ‘Buy’ rating, citing potential licensing or settlement opportunities.

Shares of Netlist (NLST) gained in midday trade on Wednesday, reaching a fresh three-year high after the memory technology company launched a new patent infringement action at the U.S. International Trade Commission against Micron Technology (MU), Super Micro Computer (SMCI), Hewlett Packard Enterprise (HPE) and Lenovo.

The filing prompted Roth Capital to raise its price target on NLST to $15 from $10 while maintaining a ‘Buy’ rating. In a note to investors cited by TheFly, analyst Suji Desilva said the new ITC action, which alleges infringement of four Netlist patents related to DRAM technology, could eventually lead to licensing or settlement discussions.

Desilva pointed to Samsung’s (SSNLF) prior settlement with Netlist and SK Hynix’s (SKHY) status as an existing licensee as precedents for a potential resolution with Micron and other companies targeted in the latest action.

NLST stock rose as much as 9% in midday trading, putting the shares on track for a fourth straight session of gains. 

Netlist Targets Micron Over ‘Unauthorized Use’

Netlist said it has initiated proceedings seeking exclusion and cease-and-desist orders against Micron, Supermicro, HPE and Lenovo. The complaint is based on alleged infringement of four Netlist patents.

The company specifically accused Micron of using its patented technology without authorization in memory products. “While its major competitors have licensed Netlist patents for many years, Micron continues its unauthorized use of Netlist technology to gain an unfair competitive advantage and reap historical profits,” said Netlist CEO C.K. Hong.

He added that Micron manufactures the allegedly infringing memory products overseas, making the ITC an important venue for Netlist’s case.

MU stock was up over 6% in midday trade amid the broader market rally, while HPE stock gained around 3%. SMCI stock rallied over 10% and was among the top trending tickers on Stocktwits after the company reported fourth quarter (Q4) earnings that beat Wall Street expectations. Analysts also raised their price targets post-earnings, but warned that the company’s margins may not be “sustainable”.

How Is Retail Feeling About NLST Stock?

On Stocktwits, retail sentiment around NLST stock trended in ‘extremely bullish’ territory over the past day, with chatter at ‘extremely high’ levels. 

Many retail traders on the platform echoed Roth Capital’s view that the legal proceedings could lead to more licensing deals and a boost to Netlist’s valuation.

The ITC action comes on the heels of Netlist signing a five-year agreement with Samsung covering patent licensing, memory supply, technology collaboration, and a 10 million share investment. The agreement settled all pending litigation between the two companies, including ITC actions.

NLST stock has gained around 440% this year and is up over 635% in the last 12 months.

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