The shares of InvenSense (INVN) are soaring today after research firm Pacific Crest upgraded the stock to Overweight from Sector Weight. The growth of Pokemon Go and augmented reality "will create a significant growth opportunity" for the company, the firm stated. InvenSense develops system-on-chip products for mobile devices.

SMARTPHONE OPPORTUNITY: The proliferation of Pokemon Go in particular and augmented reality in general could boost InvenSense's growth, particularly in the midrange smartphone market, wrote Pacific Crest analyst John Vinh. Demand for 6-axis gyros, which InvenSense markets, should increase significantly going forward, predicted Vinh. Most midrange smartphones currently don't have 6-axis gyros, which are necessary to "effectively play" Pokemon Go and games of the same type, the analyst explained. For every 10% share of the midrange smartphone market that adopt InvenSense's gyros, its fiscal 2018 earnings per share will rise 11c, Vinh estimated. 

OTHER CATALYSTS: InvenSense is likely to obtain more revenue from Samsung's Note 7 device, and it should benefit from increased sales of drones during the upcoming holiday season, Vinh predicted.

PRICE ACTION: In late morning trading, InvenSense jumped 12.5% to $7.65.