Was The Move In SanDisk Shares On Thursday Overdone?

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SanDisk Corporation
SNDK
lost more than 18 percent on Friday on back of the company cutting its quarterly revenue forecast. On the same day, BTIG analyst Walter Piecyk downgraded the stock to Neutral and reduced his price target from $123 to $70. Piecyk was on CNBC recently to explain the reasons for the downgrade and whether the decline on Thursday was overdone. More About SanDisk "Our call is more about SanDisk specifically, but certainly there's not a tremendous amount of strength in the market obviously," Piecyk said. "It's easier to perform when there's excessive growth, but in this case, it's probably more about SanDisk's execution and whether the products are really differentiated enough to drive some revenue growth." Investors In A ‘Vacuum' Piecyk was asked if the move in SanDisk shares on Thursday was overdone. He replied, "Tech is always tough, right? When you start missing on revenue and earnings, we don't know where the margin is, the company has kind of left investors in a vacuum. They are not going to talk about anything until April '15. They have very high margins 27 percent historically." "Now we are down to expecting 17 percent, but their competitor in this space Micron (Technology Inc.), who I don't think has great products, but they have much lower margins. So, we are in a kind of no man's land on earnings and […] the earnings have been coming down a lot, consensus probably comes down another dollar on 2015 and 2016 numbers, they came down a dollar the first time they [pre] announced back in December." "So, not really knowing where those earnings are going to settle in and I think makes it difficult for people to kind of find the bottom for the stock," Piecyk concluded.
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Posted In: CNBCMedia
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