Pacific Crest Analyst Says SanDisk's 'Big Beat' Suggests Company Making A 'Comeback'

by Jayson Derrick

July 23, 2015 9:43 AM | 2 min read | Make a Comment

Shares of

SanDisk Corporation

SNDK

were trading higher by more than 10 percent Thursday morning after the company reported its

second quarter results Wednesday afternoon. In a report published Thursday, Pacific Crest analyst Monika Garg commented that SanDisk's "big beat" coupled with "significant" margin upside suggests the company is making a "comeback." Garg noted that SanDisk's retail and enterprise revenue were better than expected while an average selling price decline of six percent quarter over quarter was also better than expected, both of which contributed to the significant beat. Garg also pointed out that last quarter, SanDisk faced qualification issues on a client SSD product due to material used in the assembly which led to lower revenue in the segment. The company noted that it is now qualifying the fix and expects to see revenue from this product in the fourth quarter. The company also expects enterprise SSD revenue grow in 2015 and 2016 and has been rolling out new solutions in SATA, SAS and PCIe. Garg also added that SanDisk's transition to 3D NAND should be "gradual" as the 3D transition take 36 to 48 months. As such, the analyst is expecting 40 percent of NAND capital expenditure in 2015 will be on 3D NAND, rising to more than 70 percent in 2016. Following the earnings print, Garg remains "constructive" on SanDisk because of its "technology leadership." The company has the best planar NAND technology and the industry's first 48-layer 3D NAND device. Finally, the analyst suggested that shares of SanDisk are trading at a greater than 50 percent discount to its asset replacement while also noting "we are buyers" as the company's earnings could move higher, much like it did after its 2012 "reset." Shares remain Overweight rated with a price target raised to $81 from a previous $75.

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Posted In: Analyst Color Analyst Ratings 3D NAND Monika Garg NAND Pacific Crest PCIe sandisk SAS SATA SSD

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