The Zacks Analyst Blog Highlights: Rambus, Micron Technology, NVIDIA, Broadcom and Lazard

Jan 07, 2014, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Jan. 7, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Rambus Inc. (Nasdaq:RMBS-Free Report), Micron Technology (Nasdaq:MU-Free Report), NVIDIA Corp. (Nasdaq:NVDA-Free Report), Broadcom Corp. (Nasdaq:BRCM-Free Report) and Lazard Ltd. (NYSE: LAZ-Free Report).

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Here are highlights from Monday's Analyst Blog:

Rambus, Samsung Ink 10-Year Deal

Rambus Inc. (Nasdaq:RMBS-Free Report) has signed a 10-year licensing agreement with Samsung Electronics. Per the agreement, Samsung will use Rambus' integrated chip technologies and security technologies in its devices such as tablets, smartphones and set-top boxes though 2023. Notably, Rambus already has an agreement with Samsung and this extension broadly signifies the necessity of the former's technologies for semiconductor companies.

In doing so, Rambus is entitled to a royalty payment of $15 million per quarter for the first five years from Samsung. Rambus also quoted that the royalty payments for the rest of the period will be determined after taking into consideration certain 'market-related factors'. Moreover, the agreement entails Samsung to pay $22 million to Rambus initially.

Rambus' patented technologies are of great importance to chipmakers for making advanced chips that are used in computers or electronic goods. Hence, the company has been signing a number of multi-year licensing deals each year, primarily with semiconductor companies.

Recently, Rambus and semiconductor company, Micron Technology (Nasdaq:MU-Free Report), entered into a similar licensing agreement for a seven-year period. Per the agreement, Rambus will receive royalty payments of up to $10.0 million a quarter, or $40 million over 12 months, totaling $280 million over the contract period.

Apart from this, over the past few months, Rambus has licensed its technology to Fujitsu Semiconductor Ltd., NVIDIA Corp. (Nasdaq:NVDA-Free Report), Broadcom Corp. (Nasdaq:BRCM-Free Report) and MediaTek Inc. for their respective integrated circuit products.

These licensing agreements are a recurring revenue source for Rambus as it has been successfully monetizing its patents. In the last reported quarter, the company reported a robust increase in its top line primarily based on the royalty payments received from various DRAM customers.

Moreover, the company expects to introduce several innovative products and services in 2014 that would support its revenue growth, going forward.

Apart from these, we are encouraged by Rambus' decision to divest its Display patent assets to Acacia Research Corp. and to focus wholly on the Lighting space, given the enormous growth prospects in this market.

Also, competition from Semiconductor Manufacturing International Corp., LSI Corp. and Advanced Micro Devices, Inc., and oversupply in the semiconductor market are concerns.

Currently, Rambus has a Zacks Rank #3 (Hold).

Lazard Upgraded to Outperform

On Jan 2, 2014, we upgraded our recommendation on Lazard Ltd. (NYSE: LAZ-Free Report) to Outperform from Neutral. The company has been witnessing rising earnings estimates over the last 30 days, which helped the company to upgrade. Moreover, the company's third-quarter 2013 adjusted earnings significantly surpassed the Zacks Consensus Estimate and compared favorably with the prior-year quarter figure.

Why the Upgrade?

Lazard has been witnessing rising earnings estimates over the last 30 days. The Zacks Consensus Estimate for 2013 increased around 1% to $1.78 per share. For 2014, the Zacks Consensus Estimate rose 1.6% to $2.48 per share, over the same time frame. We expect its improving fundamentals to gain analysts' confidence in the upcoming quarters as well.

Lazard is diligently working on its cost-containment measures. In 2012, the company announced cost saving initiatives, which were expected to record about $125 million in annual savings from its existing cost base. The company has exceeded its target and now anticipates total annual savings of about $160 million, partially offset by investment in business. Moreover, two-third of the expense savings is anticipated to be realized in 2013, and full in 2014.

Lazard is an asset for yield-seeking investors due to its strong capital deployment activity. Since the beginning of 2010, it has doubled its quarterly dividend and returned more than $1 billion in capital to shareholders. Moreover, in the first nine months of 2013, the company returned $294 million to shareholders and recently declared a special dividend of 25 cents per Class A common stock. These actions are bound to boost investors' confidence.

At the current level, asset management businesses are under cyclical and secular pressures, many of which have been aggravated by the financial crisis. These pressures include volatile markets and new regulatory restrictions. Though Lazard remains well positioned over the long term, given the ongoing macro headwinds, a limited upside is expected in the near term.

Currently, Lazard carries a Zacks Rank #2 (Buy).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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