Rambus Shares Initiated At Buy, $15 Target

Although much of the investment made by Rambus Inc. (NASDAQ: RMBS) in recent years are still in stages of early sales, the company’s substantial fixed revenue offers “valuation headroom for attractive optionality from growth initiatives,” Wunderlich’s Matthew S. Robison said in a report. He initiated coverage of the company with a Buy rating and a price target of $15.

The company is collaborating more with licensees, is increasing IP sales for enablement in addition to patents, and has begun a fabless semiconductor initiative that complements licensee products, analyst Matthew Robison said. He added, “Rambus is branching to end-user applications with security, as well as enabling new feature fulfillment models for licensees and application developers.”

Smart Card Solutions

Rambus acquired Smart Card Solutions in 1Q16, representing the beginning of its move up-market for mobile payments. “Integration with CryptoManager will enable devices with licensee chips to be programmed in the field to accept secure credentials from service providers,” Robison wrote.

Although Rambus is currently a low-growth company, albeit with healthy margins, its shares are attractively priced, providing “compelling opportunity for appreciation as management executes on strategy,” the analyst commented. He added that early indications were positive, including the Cryptography Research Division technology licensing to early adopters.