BlueStone Capital Partners, L.P. Announces Investment Opinion on Silicon Storage Technology, Inc.
BlueStone Capital Partners, L.P. Upgrades Silicon Storage Technology, Inc.(1) (SSTI) to a 2-1 from 1-1; Company Outlook Remains Exceptionally Strong
Updated 3:46 PM ET January 4, 2000
NEW YORK (BUSINESS WIRE) - Senior Analyst Steve Loewengart upgraded Silicon Storage Technology, Inc.'s (SSTI-NASDAQ-$33.38) rating to 1-1 from 2-1.
Analyst's Summary
We are raising our investment opinion on Silicon Storage
Technology to 1-1 from 2-1. We believe that the recent share
price decrease to $33.38 today makes the current valuation
attractive. We continue to believe that our current estimated
price targets are still valid, and we believe that fundamental
indicators appear to be strengthening. Our price target remains
at $50 over the next 12 months, and we expect the shares to
attain the $56 level over the longer term. These levels represent
P/E multiples of 30 times and 33 times, respectively, our $1.68
EPS projection for 2002.
We expect revenue growth to reach $387 million by 2002 from $69
million in 1998. During this period, we believe that gross
margins will improve to the mid-30% range. We anticipate a
two-year period of rising chip demand accompanied with limited
increase in production capacity for nonvolatile flash memory
devices at other manufacturers. The impact will be a firming of
selling prices for the duration of this period, or a
substantially lower rate of price erosion.
Silicon Storage Technology with its emphasis on expanded customer
service, relationships, and balanced growth to support its
research and development/product design programs, has reinforced
its strong competitive position. Its close collaborative
relationships with Motorola (MOT-NYSE-$138.38-Not Rated) and
Qualcomm (QCOM-NASDAQ-$164.50-Not Rated), the two acknowledged
leaders in wireless communications, should help the company
maintain its leadership position. It is within the realm of
possibility that other strategic collaborations will be
established over the next two years.
The number of different chips in production now stands at 40
products compared with four a year ago.
The intellectual property possessed by SSTI based on its design
experience and investment in R&D constitutes a hidden asset.
SSTI has wisely (in relation to its present revenue size), in our
opinion, chosen to target as its core market the mid- to
large-scale memory segment of the flash market. This is the
segment in which end-use applications include cell phones with
internet access, fax transfer, e-mail, transactions such as
security purchases and airline tickets, and speech recognition
among the advanced features. Further applications for SSTI
designs are in set-top boxes, which can translate HDTV signals to
quality pictures on an ordinary TV set or to download digital
signals directly to a TV.
SSTI has created a position of technological leadership in its
core-market sphere. This is based on the strategy to concentrate
in the 0.25 micron and system on a chip-design areas. These
enable SSTI to offer more memory on a smaller chip and/or to
combine logic and memory on the same device.
(1) BlueStone Capital Partners, L.P. makes a market in this security.
BlueStone Capital Partners, L.P. is a full-service investment banking and brokerage firm that delivers financial services to emerging growth and medium-size companies worldwide. BlueStone Capital assists clients in maximizing their growth by providing sophisticated investment strategies that are designed to achieve clients' strategic, operating and financial goals.
Contact: BlueStone Capital Partners, L.P. Steve Loewengart, 212/850-0870 |
