Deutsche Bank Previews SanDisk's Q4 Earnings

Deutsche Bank issued a Q4 earnings preview on SanDisk Corporation SNDK Tuesday and reiterated a Buy rating and $100 price target.

Analyst Sidney Ho noted that the company lowered its 4Q revenue forecast last week “from $1.80-1.85bn to $1.73bn, citing weaker than expected sales in retail and iNAND products. Gross margin was lowered to ~45 percent from the previous guidance of 47-49 percent, implying that the revenue miss was mostly ASP-driven.”

Ho expected Q4 results inline with the company’s guidance and that the “mid-point of guidance suggests EPS of $1.20-1.25 (vs. DBe of $1.21 and consensus of $1.24).”

“What remain to be answered are: (1) how much of the miss was driven by pricing pressure vs. unit shortfall, (2) was the iNAND weakness driven by smartphone and/or tablet overbuild, or a shift of demand to MCP products, and (3) what was the impact of currency on sales, especially in emerging markets,” according to the analyst note.

Ho concluded that “while near term guidance could be challenging, we believe SNDK can effectively manage its product mix amid short term supply-demand imbalance.”

SanDisk closed Tuesday at $78.80, down 0.16 percent.