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We expect technology licensing company Rambus Inc. (RMBS - Snapshot Report) to beat expectations when it reports second quarter 2013 results on Jul 18.

Why a Likely Positive Surprise?

Our proven model shows that Rambus is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method), which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is at +9.09%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks Rank #1 (Strong Buy): Note that stocks with Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating earnings. The sell rated stocks (#4 and #5) should never be considered going into an earnings announcement.

The combination of Rambus’ Zacks Rank # 1 (Strong Buy) and +9.09% ESP makes us very confident in looking for a positive earnings beat on Jul 18.

What is Driving the Better Than Expected Earnings?

We believe that Rambus has had a great quarter. Rambus has signed a two-way licensing agreement with European chip-making company STMicroelectronics. Both the companies will use each other’s patented technologies for excelling in their core areas. Apart from this, the deal puts an end to the decade-long legal battle between the two companies and also keeps the doors open for further collaborations.

Apart from STMicro, Rambus settled legal disputes with South Korean memory chip-making company SK Hynix and signed a patent licensing agreement.

Also, Rambus is adding features to its LED (light emitting diodes) portfolio and is on its way to capitalize on the growing popularity of energy-efficient lighting.

Rambus has surpassed estimates in the past four trailing quarters, which resulted in an average positive surprise of 176.85%.

Other Stocks to Consider

Apart from Rambus, we also expect earnings beat from the following stocks.

SanDisk Corp. (SNDK - Analyst Report), Earnings ESP of +4.55% and Zacks Rank #1 (Strong Buy).

Huron Consulting Group Inc. (HURN - Snapshot Report), Earnings ESP of +1.64% and Zacks Rank #2 (Buy).

Gartner Inc. (IT - Snapshot Report), Earnings ESP of +1.96% and Zacks Rank #2 (Buy).

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