Rambus Gains on Wells Fargo CommentsFundamental Analysis
Wells Fargo cast a favorable light on Rambus (NASDAQ: NASDAQ:RMBS ), following encouraging developments from Micron Technology (NASDAQ: NASDAQ:MU ). As a result, Rambus shares surged more than 6% intra-day today.
The focus was on NASDAQ:RMBS 's potential gains from MU's shift to high-volume DDR5 server DIMM shipments and a projected rise in data center revenue in Q1/24.
Wells Fargo noted that MU's positive trajectory in DDR5 server DIMM shipments is a particularly good sign for RMBS. This trend is expected to lead to a robust quarter-over-quarter ramp-up in RMBS's DDR5 chipset sales into 2024. Additionally, MU's anticipation of DDR5 units surpassing DDR4 in the first half of 2024 could signal an Average Selling Price (ASP) increase and a larger market share for RMBS's chipsets.
The pace of DDR4 inventory drawdowns is also highlighted as a crucial factor for RMBS's near-term performance. With expectations of revenue normalization in DDR4 and continued growth in DDR5 sales, analysts suggest a favorable outlook for RMBS.
Wells Fargo reiterated its Overweight rating and $70 price target on Rambus shares.
Technical Analysis
Rambus is in a rising trend channel in the medium long term. This shows that investors over time have bought the stock at higher prices and indicates good development for the company.
The stock is approaching resistance at 69.50 dollar, which may give a negative reaction. However, a break upwards through 69.00 dollar will be a positive signal.
