RMBS
Rambus Inc.
$87.75
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 44.2% below fair value
You pay
$87.75
Bear
$78.81
Fair
$157.31
Bull
$266.93
Bear
$78.81
-10.2%
15% stage 1 growth, 12% discount
Fair
$157.31
+79.3%
25% stage 1 growth, 12% discount
Bull
$266.93
+204.2%
32% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (25% base case)
Terminal Value % of EV
45%
Implied Market Multiple
30.0x
Market is pricing in (growth)
16.4%
vs 25.0% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $147.40 from 14 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $157.31 per share.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions