Another Rambus Run-Up

The stock has nearly doubled in the past month as investors see a strong case for victory in several legal frays.

Author:: Alexei Oreskovic
Publish date:: Jan 11, 2006 1:28 PM EST

Rambus

shares rose sharply Wednesday, after a financial analyst predicted the company could garner nearly $1 billion in royalties and damages stemming from various legal battles.

"We believe 2006 could be a positive turning point in Rambus litigation efforts that could significantly change the financial structure of the company," wrote WR Hambrecht analyst Daniel Amir in a note to investors upgrading the company from a hold to a buy.

Shares of Rambus recently climbed $6, or 12%, to $34.35 in midday trading Wednesday.

The stock is up 90% since the beginning of the month, adding $1.6 billion to the company's market cap.

Los Altos, Calif.-based Rambus develops intellectual property for computer memory chips which it licenses to technology companies.

Last week, Rambus

scored a legal victory when U.S. District Court Judge Ronald Whyte ruled that the company did not unlawfully destroy evidence in a patent infringement case with South Korea's

Hynix

. That case is now slated to go to trial in March.

Rambus is involved in a spate of other litigation, including a patent infringement suit with

Micron

(MU) - Get Report

, and a case alleging that several companies, including

Samsung

, Micron and Hynix, conspired to fix prices in the market for DRAM chips.

According to Amir, Rambus has a good chance of gaining at least partial victory in most, if not all, of the cases. He pegged the potential royalty and damage upside to Rambus at $936 million.

Also contributing to the bullish outlook on Rambus is the company's

recent $75 million licensing pact with

Advanced Micro Devices

(AMD) - Get Report

. As a result,

Intel

(INTC) - Get Report

could renew its own deal, which is set to expire this year, wrote Amir.

Amir raised his 2006 revenue and earnings estimates for Rambus to $180 million with 29 cents EPS.