To all, Upside magazine article on Rambus.
Off the Charts
Rambus: No Flash in the Pan
March 31, 1998
By Jim Evans
It's happening again. On news that Morgan Stanley, Dean
Witter, Discover & Co. upgraded its rating on Rambus from
"neutral" to "market outperform," Rambus jumped 4 7/8 points
to close at 43 3/4 Tuesday. The jump will remind traders of
November, when Hambrecht & Quist gave Rambus a target
price of $100 for CY 98 and its share price jumped over 17
points to around 61.
You could ask, "what took Morgan Stanley so long?"--most
analysts have been bullish on Rambus since its incredible IPO
in 1997. You could say Morgan Stanley took its cue from
Rambus' Monday press release trumpeting over $1 billion
worth of chips sold by licensees using Rambus technology. But
Morgan Stanley analyst Mark Edelstone says that's not the
case.
Edelstone looks at the figure as a market opportunity. "The $1
billion is a fraction of what the company's customers will ship in
the future," Edelstone said. "We feel that Rambus will have the
next memory standard for the next generation of PCs."
Edelstone, not known as a hype monger in the analyst set, also
gave the company a $60 target price over the next 12 months
and a $150 target price over the next four years. "The market
Rambus is addressing today is a $20 billion market
opportunity. It's going to be $40 billion in the next three or four
years," Edelstone said.
H&Q analyst Rob Chaplinsky, who released a report Tuesday
reiterating the firm's "buy" rating, said he believes that Rambus
technology will be adopted as the memory standard for PCs.
While some other "virtual" chip companies (companies that
design chips, but do not make or sell them) may have to
change business models as competition increases, Chaplinsky
says Rambus is well-positioned.
"Some companies will have to adjust," said Chaplinsky. "But
Rambus is the only 'Switzerland' type company. They don't
compete with anyone and they license to everybody."
In his report, Chaplinsky wrote that Rambus' shares have been
under pressure lately because of insider trading activity, among
other reasons (the company's largest individual shareholders
recently sold between 1.5 percent to 5.8 percent of their
holdings). Chaplinsky believes this only verifies management's
optimism in the company. With all the action on Tuesday from
the banks, and with the Rambus share price floating all too
comfortably at around 43, look for the baby to move on
Wednesday big time. Just think back to November.
Jim Evans is finance editor at UPSIDE.
*** OT ***
Doug be careful with Frog, it is really pejorative for french canadians. D'accord... |
