Saifun Semiconductors (SFUN)

[midastouch017]

Psagot Ofek rates Saifun “Buy”

Saifun’s challenge is to repeat its success in NAND technology with NROM technology.

Gil Shlomo 30 Jan 06 16:12

Psagot Ofek Investment House Ltd. gives Saifun Semiconductors Ltd. (Nasdaq:SFUN) a “Buy” recommendation, with a target price of $44, 29.4% above the share’s current price.
Saifun has developed NROM technology for flash memory processors, one of the main advantages of which is to double the storage capacity of any given processor. The company’s unique business model for selling intellectual property enables it to present an exceptional operating profit margin of over 50%.

The added value Saifun offers the world’s flash memory processor makers is cheaper product prices, a critical factor in the commodities market. Analysts therefore believe that the company will achieve annual double-digit growth rates, thanks to rising demand for flash memory processors in general, and Saifun’s technological advantages in particular.

The flash memory processor market, including all technologies (NOR, NAND, serial flash, and embedded flash) is expected to be one of the fastest growing segments of the semiconductor market, with a projected annual average growth rate of 20% in 2004-2010.

Psagot Ofek says Saifun’s challenge will be to repeat its success in the NAND sector, which is expected to have 33% annual growth, in the NROM sector, which currently has slightly more than 4% of the volatile memory processor market.

Analysts predict that Saifun will post $69.3 million in sales in 2006, with an operating profit of $54.87 million, and a net profit of $38.61 million ($1.16 per share).

Saifun has set a target of either $400 million in sales in 2010, or 20% of flash memory processors using NROM technology by this date. Psagot Ofek is more conservative than Saifun’s management, and forecasts $265 million in turnover in 2010.

http://www.globes.co.il/serveen/globes/docview.asp?did=1000056013&fid=942

Dubi