Citi On Why SanDisk Is 'Still A Buy'

Citi slashed its SanDisk Corporation SNDK price target by $19 to $78, but reiterated its Buy rating on the troubled technology company. SanDisk closed Friday at $64.59, down more than 25 percent on the week following a second consecutive quarter where management negatively pre-announced earnings.

In the near-term, the analysts pegged the company as a "show-me story," while simultaneously noting that the 12-month outlook is constructive. In short, the analysts argued that the "estimate cuts appear sufficient" and the valuation at 12x the next 12-month (NTM) EPS "looks attractive." The analysts also said they expect an "accelerated" pace of share repurchases in the first half of the year given the company's $5 billion in gross cash.

The $78 valuation pegged SanDisk at a multiple of 14x NTM EPS – down from 15x prior to reflect "execution risk."