Source: InvenSense, Facebook.

What: Shares of InvenSense (NYSE:INVN), a company focused on designed motion interface solutions known as MEMS (micro-electro-mechanical systems) for smart devices, gaming systems, and wearable gadgets, leaped higher by $0.54, or 3.5%, in Tuesday's trading session to close at $16.10 following an upgrade and price target hike from Wall Street research firm Rosenblatt.

So what: According to Brian Blair, the covering research analyst at Rosenblatt, InvenSense appears to be holding firm in its smartphone market share after suffering a number of recent blows.

As Blair noted in his company's research report, InvenSense appears to have gained back significant market share in phones made by Xiaomi in China, one of InvenSense's largest customers. Additionally, Blair believes InvenSense has stymied any further market share pressures on the Samsung Galaxy S6, since it no longer features Qualcomm's SnapDragon processor, which happened to be bundled with STMicroelectronics' motion interface solutions. With Qualcomm out of the picture, it should clear the way for InvenSense to rebuild market share in its smartphone category.

Blair also took the good with the bad when it came to innovation giant Apple (NASDAQ:AAPL). Blair suggests that sales of the iPhone 6 and iPhone 6 Plus continue to remain strong -- which is good, since InvenSense has its gyroscope and accelerometer in both devices. However, Blair also notes that it is a bit of a blow to InvenSense that it didn't land the same contract for the Apple Watch. Blair and his team anticipate that InvenSense's market share in wearables could fall from more than 90% to single-digits by the end of the year, since the Apple Watch is expected to be such a dominant wearables device relative to everything else on the market.

Ultimately, Blair and Rosenblatt upped InvenSense to "buy" from "neutral" and reset their price target to $20 from $15. This would imply 29% upside based on Monday's closing price. 

The Apple Watch. 

Now what: The question that investors have to ask here is whether or not InvenSense can live up to the hype, or if this is a "show me" stock that you should keep your distance from.

On one hand, InvenSense has proven capable of winning major contracts (e.g., iPhone 6 and 6 Plus) and is the primary MEMS maker in smartwatches -- at least until the Apple Watch officially starts landing on consumers' wrists. It's not out of the question that InvenSense could win the contract in the next-generation Apple Watch or continue to build smartphone market share via Xiaomi or Samsung. With expectations of double-digit percentage sales growth and a reasonably low forward P/E, there's reason to believe Rosenblatt's price target is attainable.

On the other hand, InvenSense's margins may come under fire if wants to have any hope of renewing future contracts with Apple. Apple understands full-well that its product is the cream of the crop, and it uses that leverage to negotiate substantial discounts with component suppliers like InvenSense. Higher sales may wind up being a moot point if InvenSense's margins suffer.

Personally, I'm taking a cautiously optimistic approach. I do believe there could be value here, and I'm not opposed to the idea of "dipping your toes in the water." However, I'd also caution that competition is getting fiercer and margins could continue to be pressured, so keep those headwinds in mind if you're considering InvenSense as an investment.