from briefing.com (schwab site)......
RAMBUS, INC. (RMBS) 80 +7 1/8. Still just plugging away with flat profits, but every now and then the allure of "the big future" rallies the stock sharply. Before the open this morning, Morgan Stanley Dean Witter analyst Mark Edelstone raised his rating for semiconductor company Rambus (RMBS) from "outperform" to "strong buy" and set a 12-month price target of $150. This upgrade is based on the belief that "Intel's 820 chipset will be ready to support Rambus DRAM-based PC introductions before the end of the third quarter." Morgan Stanley also suggests there may be a short squeeze. Interestingly, though, Morgan Stanley has simultaneously lowered earnings estimates. Estimates for the fiscal year ended September 1999 are unchanged at $0.32 per share, but Fiscal 2000 estimate is slashed 20% from $1.00 to $0.80 per share. The "big future" is still in the cards, but it has simply been pushed out a little further. Morgan Stanley is in essence saying that the "big future" will take a little longer, but appears now to be more likely as "the risk factor associated with the initial Rambus DRAM transition has declined." Of course, the "big future" has long been a part of the RMBS story. For the past couple of years, Wall Street has forecast big earnings gains just around the corner. Meanwhile, per share earnings in the past five quarter have been: 7, 7, 7, 8, and 8 cents. Not exactly explosive growth. And, revenue in the most recent quarter was down sequentially and up only 2.2% from the year earlier quarter. Regular Briefing.com readers know that we have long been skeptical on this stock. Not because it is a bad company, but because so much high growth is already priced into it. The company has not delivered on its great promise, and yet the stock trades at 267 times earnings. The real earnings surge is supposed to happen in 2001, but that is a long way off in the technology world. A lot can change. A lot may happen that literally no one can predict. Buying the stock today implies that not only will the current high expectations be met, but even exceeded. This is the type of stock that could actually start selling off once it does start delivering on its promise, if investors take profits or worry about what the next wave of change will bring. For next quarter, or course, the "big future" is not yet here. Weaker than expected DRAM pricing has the consensus forecast at just $0.06 per share, the lowest profits in over a year and one-half. But hey, the second half of 2001 looks great. |
