Rambus' Strategic Resource Redirection To Drive Performance Despite Minor Revenue Impact: Analyst

Susquehanna analyst Mehdi Hosseini reiterated a Positive rating on Rambus, Inc. RMBS, raising the price target to $75 from $60.

Rambus recently announced the sale of their SerDes and Memory Interface PHY IP business to Cadence Design Systems, Inc. CDNS.

The analyst views this sale as positive to RMBS OM, given the heavy opex associated with the PHY business, as an investment is needed at every node level for each customer.

SerDes and Memory Interface PHY IP is less than 5% of RMBS total revenue and is expected to be immaterial to revenue for CY23, notes the analyst.

Hosseini thinks Rambus will gain from opex synergies from the latest divestiture announcement, as redesigning at every node is viewed as opex-heavy. 

The analyst adds that RMBS can instead redirect resources to other areas and thus realize some opex synergies. 

However, the sale of IP assets to Cadence may have little of a material impact on the top line, the analyst adds.

Other catalysts for the company are the ramp of Sapphire Rapid and the increased adoption of GDDR/HBM.

For Q2, the analyst expects EPS of $0.39 and $1.73 for FY23. 

Price Action: RMBS shares are trading higher by 3.1% to $60.54 on the last check Friday.