UPDATE: Goldman Sachs Downgrades SanDisk on Multiple Challenges Ahead

In a report published Tuesday, Goldman Sachs analyst James Schneider downgraded SanDisk SNDK from Buy to Neutral, but reiterated the $65.00 price target.

In the report, Goldman Sachs noted, “We are downgrading SanDisk from Buy to Neutral for the following three key reasons: (1) We now believe greater NAND supply may be added in the next few quarters than we previously assumed, which could drive meaningful near-term price declines; (2) The stock is correlated to gross margins, and we think gross margins are likely to peak in 2H13 given price compression and slower cost reductions in this timeframe; (3) With the stock trading within 14% of our price target, we see limited upside. Since being added to the Buy List on 6/24/2012, SNDK is up ~57% vs. the S&P 500 up ~27%. We continue to see SanDisk as well positioned relative to peers.”

SanDisk closed on Monday at $55.40.