Rambus Shares Rocket as Analyst Raises Bar

The great Rambus debate took a new turn Wednesday as the stock rocketed 31% after an influential analyst set a $500 price target on the swinging shares.

Rambus Inc. (RMBS) soared $83.80 to $350.38 after Morgan Stanley Dean Witter’s Mark Edelstone, whom many money managers consider the premier semiconductor analyst, raised his $110-a-share forecast for the next 12 to 18 months.

The stock had plunged 32% in the previous two days as investors fretted about the company’s technology and competition from IBM Corp. (IBM).

On Monday, a report on https://www.tomshardware.com asserted that Rambus’ technology did not work as well as older, cheaper memory products. On Tuesday, IBM introduced memory chips it said can send twice as much data to a microprocessor as current chips.

Edelstone’s report, however, said Rambus is gaining favor among memory chip makers and predicted that licensing royalties will rise, giving the company one of the highest profit margins in the semiconductor industry.

“We’re increasingly confident about the implementation and acceptance of their technology,” Edelstone said. He maintained his “outperform” rating on the Mountain View, Calif.-based company.

After trading between $50 and $100 for most of the last 2 1/2 years, Rambus’ shares have surged more than fourfold since February.

The run was spurred by positive comments from Intel, the world’s biggest computer chip maker. Intel indicated it will continue to back Rambus technology in new chips, and personal computer makers unveiled models using the products.