Wow! - The flash memory market in general and SST in particular are in the very early stages of tremendous growth.
Magic 25
Dec 13, 1999
Despite Strong Recent Gains, SST Has Room to Move Higher
(12/13/99)
Shares of Silicon Storage Technologies (NASDAQ:SSTI - news) have enjoyed a spectacular run over the past few weeks. While there has been no material news released from the company, the underlying business fundamentals at SST are extremely strong. Additionally, SST management continues to execute on their new product strategy. SST is also benefiting from the continued robustness of the flash memory market. Demand for flash is proliferating and supply is tight. As a consequence, favorable pricing is resulting in strong operating leverage for the company.
SST returned to profitability in its most recently completed quarter, the third quarter of fiscal 1999. With the seasonally strong fourth quarter quickly coming to a close, business continues to track on plan at the company, with expected earnings per share of $0.19 for the fourth quarter.
While shares of SST have traded sharply higher over the past few weeks, further upside remains. The company has built a strong franchise in flash with its patented SuperFlash technology, enabling the company to enjoy unique advantages over its competitors. SST has entered into potentially lucrative licensing deals with Motorola (NYSE:MOT - news) and Qualcomm (NASDAQ:QCOM - news) . These deals can represent meaningful upside to earnings estimates. That said, as the timing of licensing revenue is unclear, we won't speculate on the potential revenue and earnings contribution at this time.
SST is well positioned to post strong growth over the coming quarters. Customers are on allocation, further evidence of tight supply. Shares of SST are poised to continue on their upward accent, as upside exists to our estimates. The flash memory market in general and SST in particular are in the very early stages of tremendous growth.
Updated on 12/13/99 with SSTI at $37.50
Recommended on 12/11/99 with SSTI at $37.50
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