Nomura Believes SanDisk Story Is Weakening

In a report published Thursday, Nomura analyst Romit Shah reiterated a Reduce rating and $65.00 price target on

. In the report, Nomura noted, “We believe the SanDisk story is weakening. The company exposed margin risk associated with a weaker product mix when preannouncing Q4. Market share became an issue in the Q1 outlook. And data points last night suggest growing risk of oversupply, which we believe represents the third leg of a stool. The communicated supply forecast of 30-40% throughout the industry is too low, and likely resets higher. SanDisk expects to grow captive bits at high-end of 35-40%; Samsung near-50%;SK Hynix EQUITY RESEARCH AMERICAS Americas Early Bird 01/29/2015 potentially 50%+. We believe rising supply is not contemplated in SNDK's outlook for accelerating revenue growth and 50%+ GMs exiting 2015. Our price target is unchanged at $65.” SanDisk closed on Wednesday at $78.05.