SanDisk Is An 'Excellent' Takeover Candidate, Bernstein Analysts Argue

In a report published Monday, Bernstein analyst Mark Newman commented that following two consecutive quarters of guide-downs, shares of

are now trading approximately 40 percent below its replacement value (fabs, royalty and cash). According to Newman, the 40 percent premium is "significantly" more than any other memory company and shows what a great takeover candidate SanDisk now is. The analyst added that acquiring the company below replacement value of $106 (an approximate 60 percent premium from current price) would be cheaper than building fabs organically, without even accounting for the "internal know-how" amassed over decades. Newman continued that a list of companies that may be interest in acquiring SanDisk include flash competitors and HDD makers and Chinese firms. Specifically, it "makes the most sense" for

and

to acquire the company while

and

are both "potential suitors." Newman also noted a "growing unrest" amongst the investor community given a "huge" cash balance, strong IP and a vastly undervalued business in an attractive market. As such, the company represents an "obvious" target for an activist investor. Shares remain Outperform rated with an unchanged $100 price target.