M-Systems Flash Disk Pioneers (Nasdaq: FLSH) shares have risen 87% over the last two months to $11.2, and according to ING Barings analyst Amit Yonay, the upward trend will continue.
M-Systems’ share price gives the flash memory chip maker a respectable company value of $303 million, but Yonay still rates the company a “Strong Buy” with a $15 price target, up from a target of $13.30 in an earlier report.
“We have increased our year 2004 revenue estimates from $121.5 million to $143.3 million, or a 42% growth rate over anticipated revenues for year 2003,” Yonay says. “The success of the DiskOnKey (DOK) and the evident migration of mobile manufacturers toward NAND flash (from NOR flash) generally and the market’s awareness of M-Systems’ Mobile DiskOnChip (MDOC) more specifically, should ensure continued growth into 2004.”
The analyst explained that M-Systems’ NAND flash products required logic and RAM components in order to work with the CPU. On the other hand, NAND technology was a cheaper solution as it was less than half the size of comparable NOR.
M-Systems’ TrueFFS technology allows for very good write/erase capabilities, Yonay said. “This makes the company’s products ideal for downloading and storage purposes. This is part of the company’s MDOC success in the mobile market, which is searching to increase multimedia features into handsets. All of M-Systems’ products are based on NAND flash,” he stated.
Yonay said he was noticing a positive change in M-Systems’ negotiating power with the raw NAND suppliers (Toshiba and Samsung), as well as with customers who were becoming increasingly aware of the advantages of the company’s products. According to Yonay, this trend is likely to continue in the next few years as more NAND manufacturing capacity is added worldwide.
“The obvious effect of stronger negotiating power is better margins,” the analyst said. “We believe that investors are beginning to realize that the industry is changing and that M-Systems is well positioned to take advantage of those changes.”
M-Systems shares closed on Nasdaq on Friday at $11.20.
Published by Globes [online] - www.globes.co.il - on 2 June, 2003