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SanDisk 'Down But Not Out,' Mizuho Says

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In a report published Friday, Mizuho analysts initiated coverage of SanDisk Corporation (NASDAQ: SNDK) with a Neutral rating and price target of $74. The analysts believe that the company continues to be the cost and technology leader in the NAND flash segment.

However, SanDisk has been losing market share in the Enterprise SSD and Client segments due to a few near-term execution slips. It also faces additional challenges in 15nm yields and due to a lack of 3D-NAND. At the same time, the analysts expressed their confidence in the company being well positioned to recover.

"We believe after 2 sequential quarters of execution missteps, SNDK is re-evaluating and in the midst of a re-organization trying to refocus and drive a strategy to regain leadership. We believe undoubtedly, SNDK is the leader in NAND flash and has had a wide margin in process and design technology in NAND but recent missteps have resulted in lost market share and lack of product," the analysts said.

Although Samsung has been aggressively pushing 3D-NAND into the Enterprise and Client segments, it is waiting for 2H15 to add meaningful 3D-NAND capacity. This, the analysts believe, offers SanDisk the opportunity to "catch up with its competitive 48-layer-BiCS 3D-NAND."

In addition, SanDisk is the leader in terms of manufacturing and process technology and is ahead of the competition in its operating margins by about 1000-2000bps.

"So, we believe it is a matter of time, before SNDK fixes its yield issues at 15nm/2D, but key here is also to get its competitive 48-layer-BiCS 3D-NAND out. But execution will be key going forward with yields, regaining share and 3D-NAND," the analysts added.

Latest Ratings for SNDK

Mar 2016SusquehannaDowngradesPositiveNeutral
Mar 2016CitigroupMaintainsNeutral
Mar 2016CitigroupDowngradesBuyNeutral

View More Analyst Ratings for SNDK
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Posted-In: Mizuho SecuritiesAnalyst Color Initiation Analyst Ratings


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