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JP Morgan Ups Lexar Media


JP Morgan raised its investment recommendation on Lexar Media (LEXR) to overweight from underweight.

Analyst Paul Coster said that the federal lawsuit against Toshiba, scheduled for the fourth quarter of 2006 hearing, could lead to a settlement or big licensing revenues in 2007, beyond the $465 million jury award that was upheld, which he values at $2.00 per share, but could reach $4 per share. He said that NAND Flash supply-constraint persists, however, and Lexar is probably on plan owing to the long-standing "favored nation" supply contract with Samsung. He added that recent IP agreements with Sony (SNE)and Memorex suggest Lexar is placing emphasis on high margin (85%+) licensing; therefore, he upped his 13 cents 2006 earnings per share estimate to 14 cents.


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