Bernstein Says SanDisk 'Turning A Corner,' Highlights Inventory Levels And $80 Upside

In a report published Thursday, Bernstein analyst Mark C. Newman maintained an Outperform rating on

, with a price target of $80. SanDisk reported better-than-expected 2Q15 Non-GAAP EPS of $0.66. The upside was driven by the company's improved product mix and stabilization of the pricing trends. The company also reaffirmed its full-year guidance implying a strong 2H. SanDisk's product revenue mix in 2Q was 39 percent retail and 61 percent commercial. In the report Bernstein noted, "The re-qualification of a new embedded component for a customer's use in their client SSD application, which was a big issue mentioned during the Q1'15 earnings call, is going well. We also believe SanDisk has been taking their prior enterprise NAND set-backs seriously and has made several steps in the right direction in Q2." Analyst Mark Newman expects the company's CloudSpeed EcoGen II solution to start contributing to revenues later this year. The company's InfiniFlash platform, which allows customers to replaced HDD based solutions with an all-flash option, is expected to perform well in the coming years. The company's Non-GAAP gross margin of 40-43 percent for the rest of 2015 "seems reasonable to us given the significant margin headwind from embedded NAND ramp in Q3 in particular (i.e. Apple)," the report said, while adding, "We still view 2015 as year of business mix restructuring for SanDisk and we believe the company should emerge better positioned in 2016."