Integrated Silicon Solutions rallies on revenue guidance

Shares of Integrated Silicon Solutions (Nasdaq: ISSI) rallied Wednesday after it upped its revenue guidance.

In morning trading, shares were up 32 percent, or 2.93, to 12.25.

The company, which makes memory chips, said after the bell Tuesday that it expects to post sales of between $63 million to $65 million in its first quarter, slightly better than the $60 million to $62 million it previously expected.

"December will establish a new revenue record for ISSI," said CEO Jimmy Lee said in a prepared release. "Sequential quarterly revenue growth is now expected to be in the 26 percent to 30 percent range."

The news was notable because many chip makers have been issuing profit warnings. SG Cowen analyst Rick Billy reiterated a "strong buy" rating.

"We reported last week that our channel checks indicated that demand for high-speed SRAM remains very strong," said Billy in a research note. "The stock market is valuing stocks like ISSI as if a severe cyclical downturn were imminent, if not already well underway. There is no evidence of any such downturn in the high-speed SRAM market at this point."

John M. Geraghty, an analyst at Gerald Klauer, echoed Billy's comments. He said that ISSI is trading near book value

Last quarter, the Santa Clara, Calif. company posted a profit of $11.7 million, or 41 cents a share, on sales of $50.1 million.

Its shares peaked at $41.81 in June before falling to a low of $7.19 last month.

Three of the four analysts following the stock rate it either a "buy" or "strong buy."

Analysts are predicting a profit of $1.90 a share in the fiscal year.