UPDATE: Bank of America Downgrades SanDisk Corporation on Limited Potential Upside
In a report published Wednesday, Bank of America analyst Simon Dong-je Woo downgraded the rating on SanDisk Corporation (NASDAQ: SNDK) from Buy to Neutral, but reiterated the $75.00 price target.
In the report, Bank of America noted, “We downgrade SanDisk from Buy to Neutral due to limited potential upside. The stock has already strongly outperformed (doubled vs the 2012-low) driven by the memory industry's upturn (2013 EPS up 2.7x YoY), and the firm's very active dividend payment and buyback policy. Our $75.0 PO (unchanged; implied 11x 2014E P/E and 2.1x PBR) is also based on up-cycle FV (trough $30; mid-cycle $50) which is close to previous peaks (2000/06). To value the stock at $80-100, we should assume a much better business environment (stronger chip demand) and new themes. Low capex offers higher FCF but the flip side is capacity constraint. Market-share loss should be a new concern; adopt a wait-and-see approach; even our estimate remains unchanged.”
SanDisk Corporation closed on Tuesday at $70.80.
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