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Technology Stocks : Rambus (RMBS) News Only
RMBS 107.76+1.2%Nov 7 9:30 AM EST
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To: REH who wrote ()2/2/1999 9:41:00 AM
From: REH   of 236
 
MS upgrades RMBS to Outperform, target $ 110.00

Key points:

- Based on the recent weakness in the stock and our belief that our long-term thesis remains intact, we have upgraded our rating on RMBS to Outperform from Neutral
- Our 12-month stock-price target of $ 110 was derrived by discounting the company's earning power of at least $ 6-$8 per share in the 2002-2003 timeframe. We believe the potential to use a lower discount rate once Direct Rambus DRAM's are shipping in high volume suggest that this stock price target could have meaningful upside.
- Due to a reduction in earnings estimates following a previous slip in Intel's 820 chipset (Camino) schedule and concerns that the schedule has slipped again, RMBS has come under selling pressure during the last several weeks.
- While it appears that Intel's chipset schedule has slipped further, we believe that our current earnings estimates remains achievable and potentially concervative. More important, we believe that the recent weeakness in RMBS has already largely discounted the schedule delays, and we believe the stock will find solid support in the mid 60's to low 70's
- We believe that Rambus' technology is extremely important to Intel's processor roadmap, and the failure to drive Direct Rambus DRAMs into the mainstream PC market would probably threaten Intel's long-term business model. Consequently, we believe Intel is highly motivated to solve any remaining technical issues and ramp the Rambus memory arcitecture into the mainstream PC market in the second half of 1999

reh
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