UPDATE: Piper Jaffray Upgrades SanDisk Corporation to Overweight, Raises PT

In a report published Friday, Piper Jaffray & Co. upgraded its rating on SanDisk Corporation

from Neutral to Overweight, and raised its price target from $35.00 to $53.00. Piper Jaffray noted, “We are upgrading SNDK to OW and increasing our PT to $53 post solid 3Q12 earnings. Our key investment thesis here is a) SNDK's non GAAP Gross Margins could expand 700bps y/y to 39.2% on improved pricing environment given tight supply resulting in modest y/y ASP decline in '13 of ~20% vs 46% this year b) Structural change amongst NAND producers in managing capacity while improving profitability and c) Benefiting from Product Mix shift next year. SNDK is even more focused on value added offerings where margins are more resilient. We expect SSD businesses will grow 20% y/y in '13, while its embedded presence at Apple secures robust unit consumption ahead. We have revised our CY12 and CY13 estimates. Our new PT of $53 is based on 15x (was 12x) CY13 EPS of $3.50. Our higher multiple reflects margin expansion and overall growth next year along with an increasing cash position.” SanDisk Corporation closed on Thursday at $42.86.