UPDATE: Stifel Lowers Price Target On SanDisk Following 4Q14 Revenue Report
In a report published Thursday, Stifel analyst Kevin Cassidy reiterated a Buy rating on SanDisk Corporation (NASDAQ: SNDK), but lowered the price target from $100.00 to $90.00.
In the report, Stifel noted, “SanDisk's 4Q14 revenue was in-line with last week's negative preannouncement. Management pointed to supply constraints as the main culprit for the lower than expected revenue results. We were incorrect in attributing the negative pre-announcement to lower retail demand. It now seems to us that a mismatch in product mix exacerbated by production yield issues and lean inventory led to a higher mix of lower GM product. Non-GAAP EPS beat our and consensus (downwardly revised) estimates mainly through cost cutting. Management expects supply constraints to continue well into 1Q15 as they replenish inventory and transition production to the 15nm node to increase total output capacity through the year. Adding to near term woes, management admitted to losing a major client SSD customer. We expect the combination of increasing adoption of client-side and Enterprise SSDs will compensate for this loss longer term. While supply constraints are typically a positive trend for SNDK shares, it seems supply constraint is making management's strategy for transitioning to higher valued markets such as SSDs more difficult.”
SanDisk closed on Wednesday at $80.44.
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