3 Analysts Say SanDisk Is Likely To Extend Q2 Growth Rate

SanDisk SNDK is expected to continue to show strong revenue and earnings growth when it posts results Wednesday, but some analysts say the stock is priced too richly.

SanDisk traded Tuesday morning at $105.24 per share, down 0.3 percent. Its 52-week high is $106.93.

"We got off the bus when the valuation got too high," Summit's Srini Sundararajan said in a note, adding that SanDisk shares are priced higher than comparable stocks. Sundararajan, who rates SanDisk at Hold, thinks second-quarter results will beat Wall Street's already high earnings expectations by about a nickel per share.

According to the consensus, SanDisk will post a 15 percent increase in profits to $1.39 per share, while revenue will grow more than eight percent to $1.60 billion.

Tigress analyst Ivan Feinseth thinks that growth will continue, and rates SanDisk a Strong Buy without a price target. Its ongoing shift to business products and the increasing penetration of solid state drives into notebooks and desktops has powered recent growth and the trend is likely to continue, Feinseth said.

In May, SanDisk announced a joint venture to manufacture 3D NAND, flash memory used in mobile devices, with Toshiba for a reported initial investment of $4.9 billion split between the two companies.

The venture may be discussed in SanDisk's conference call. Until more news is forthcoming about the venture, "we have to be worried on that count," Sundararajan said, citing capital expenditure.

Pacific Crest's Monika Garg said competitors have limited capacity for meeting growing demand 3D NAND, thus putting SanDisk in a "strong price environment."

Garg rates SanDisk at Outperform with a $123 price target.