Rambus (RMBS) shares could climb 20%, says analyst

Rambus (NASDAQ: RMBS), a semiconductor company that offers DDR memory interface chips, gained after it was upgraded from “Hold” to “Buy” by analysts at Jefferies. Jefferies also raised its price target on the stock to $65, implying upside of over 20% from its most recent closing price.

The ratings upgrade followed recent meetings with management and increased confidence in the company’s positioning.

Analyst Mark Lipacis explained, “Post the [non-deal roadshow] we hosted with RMBS, we upgrade RMBS to Buy from Hold on increased confidence that RMBS is well positioned for not only leading buffer chip share in ramping DDR5 but also for meaningful share in the significant adjacent growth opportunities of companion chips and CXL.”

Jefferies sees 2026 earnings per share power of over $3.30, driven by nearly 30% compound annual growth rate in product revenues over the next four years.

“RMBS is in a strong position to double its RCD product market share while seeing its TAM double from adjacent product opportunities by 2024 over 2021 revs, catalyzing 29% CAGR for product revs to 2026,” said Lipacis. “Product revs are 40% of revs in CY 2022 but we expect it to be the primary driver of growth going forward to 61% of revs in CY 2026 and as such is the focus of our upgrade. The remaining 60% of revs today are driven by high and steady FCF margin IP businesses that support strong FCF margin of 37% in 2022.”

Rambus climbed over 9% following the upgrade.

By Louis Juricic

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