April 24 (Bloomberg) -- Rambus Inc., a memory-chip designer that gets most of its revenue from royalties, rose the most since Feb. 8 after an analyst at JPMorgan Chase & Co. raised his rating on the stock.
Rambus climbed 8.4 percent, or 37.5 cents, to $4.85 in New York, the stock’s first gain in five days. Paul Coster, an analyst at JPMorgan, boosted his rating on Rambus to overweight, the equivalent of a buy, from neutral.
After declining 41 percent this year before today, the company’s shares are fairly valued and aren’t likely to decline further, Coster wrote in a note. Rambus’s stock slumped after it lost a legal dispute with Micron Technology Inc. last year, and has been dropping since last week, when its second-quarter earnings forecasts fell short of some estimates, Coster wrote.
Sunnyvale, California-based Rambus licenses chip designs and seeks royalties on its ownership of technologies fundamental to computer memory chips. The company has been involved in legal disputes with memory chipmakers over the validity of its ownership of that technology for more than a decade.
Rambus stock is down more than 70 percent from its closing price on Nov. 15, the day before Rambus lost a jury trial in which it alleged that Micron and Hynix Semiconductor Inc. conspired to prevent its memory chips from becoming an industry standard.
As Rambus’s legal costs decline, its earnings will improve, and it has opportunities to bring in additional revenue by selling its technology into the mobile-device and LED-lighting markets, Coster wrote.
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