Goldman Sachs Bullish On SanDisk Corporation

On Thursday, analysts at Goldman Sachs upgraded shares of SanDisk Corporation SNDK from Neutral to Buy and raised the price target from $87 to $106.

Mark Delaney is upgrading the stock on potential gross margin expansion 2015E.

Delaney finds the weakness in the yen will be positive for SanDisk margins, “Each 10% move adds 200 bp to SanDisk’s margins. SanDisk’s yen costs averaged about 101 in 2014E, and the yen is now nearly 14% weaker. Each 100 bp increase in gross margin adds 3-4% to EPS.”

In addition, “We expect balanced NAND supply/demand in 2015, implying stable like-for-like margins and allowing for FX (and potentially better mix) to be realized. We estimate
that product mix could be neutral to a 75 bp tailwind to margins in 2015E.”

Lasty, the Malaysian SSD plant may lower SanDisk’s tax rate in 2015 or 2016 further adding to EPS growth.

Shares of SanDisk recently traded at $95.28 up 2.6 percent.