Pacific Crest On SanDisk: We Are Buyers As 'Preannouncement Issues Are Behind Us'

In a report published Monday, Pacific Crest analyst Monika Garg reiterated an Outperform rating and a $116 price target on shares of SanDisk Corporation SNDK. The firm's analysts recently met with the company's CFO Judy Bruner, its IR team and key investors, and this meeting confirms their "confidence that preannouncement issues are behind us."

The analysts also note that guidance seems materially conservative and say they "expect estimates to move higher through the year. SNDK again plans to return more than 100% of FCF to investors [in the form of dividends and share buybacks], and is trading at a 9% FCF yield."

Two extra points are central to the firm's base case for SanDisk:

• Believe NAND margins are closer to a bottom, which means their estimates could be conservative.
• Think "rising node transition challenges could lead to limited bit supply growth and lower volatility in memory pricing, which could justify multiple expansion for memory vendors."

The firm estimates EPS of $5.33 for fiscal 2015 (versus a $5.26 Thomson Mean), and EPS of $6.24 for fiscal 2016 (versus $6.22). Revenues are expected to come in at $ 6.733 billion for 2015, and $7.2343 billion for 2016 -– both figures are also above Thomson Means.