Ramming Ahead With This Tech Leader

Written by GSCR Staff   
Tuesday, 28 January 2014 09:37

In Monday’s Goldman Guide we offered some hope in a somewhat miserable time in the market and recommended 1 to buy and two to sell.  Along those lines we think we have one to keep from our 2013 Market Monitor picks.

Back in early March, we highlighted Rambus Inc. (NASDAQ – RMBS - $9.58) as a solid play in technology and specifically the LED space.  The stock is up over 77% in just under an eleven month span.  Yesterday, the Company reported 2013 and 4Q13 financial results and the news was very positive.  In addition to meeting 4Q13 EPS and revenue, Rambus reported nearly a 28% increase in revenue from 2012 to 2013.  Finally, the firm estimated that revenue will be approximately $295 to $305 million for FY2014 above current analysts’ consensus of $288 million.  Deal flow was great in 2013 and should maintain positive momentum in 2014.

The LED space continues to be red hot as applications for smartphones and tablets are in high demand.  Rambus was able to capitalize on this with new license agreements signed with SK Hynix, Micron Technology, ST Microelectronics and LSI Corporation during 2013.

The stock looks strong from a technical perspective as the options contracts indicate the smart money is bullish on the stock over the next several months.  Additionally, RMBS looks as if it has entered another accumulation phase with a 13% rise over the last two weeks with about 900,000 shares traded per day.

With a great deal flow and a gross margin of 89%, 2014 should be another banner year for Rambus, Inc.  The $12 level is definitely within striking distance by 3Q14.

Have a great day!

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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