Morgan Stanley Gets It - EPS & Price Target Raised
This was posted by Shlomi Cohen:
Morgan Stanley 14 May
Conclusion: We reiterate our OW thesis and raise our price target to $49 based on revised estimates, which reflect firming SNDK product pricing so far in Q2, as indicated by our proprietary tracker (Ex 1). In addition, we continue to believe constrained NAND supply and share gains at handset/tablet OEM’s like AAPL will support stable product margins this year. We view SNDK as the best derivative play on tablet PC ”wars” in 2H as tablets could generate ~8x more NAND demand than notebooks (Ex 3). And new smartphone rollouts are set to drive widespread adoption and higher NAND content per handset (Ex 4) going forward. What’s New: Our weekly proprietary pricing tracker shows SNDK product pricing up 8%, or better than our expectations for flat to down seasonality. As a result, we raise our 2Q ASP/bit assumption to down 6% Q/Q from down 8% and increase product gross margin to 41% from 40% prior. Our FY10 rev/EPS estimate moves to $5.06B/$4.23 from $4.92B/$4.00 and FY11 rev/EPS to $6.15B/$4.48 from $5.85B/$4.18. Where we differ: While we remain Cautious on the group, we prefer semis with exposure to strong product cycle fundamentals like NAND. Furthermore, we do not see double booking or inventory build in NAND, as our tracker data show SNDK channel inventories at normal seasonal levels (Ex 2). Our revised FY10 revs/GMs are ~3%/150bps above the high end of company guide and reflect our mid-term outlook for healthy NAND supply/demand. Our new price target of $49 is based on ~11x CY11 EPS estimate of $4.48, and risk-reward looks attractive on our $60/$35 bull/bear cases.
never argue with a guy named shlomi from new york. yer gonna lose no matter what it is.I ain't worried I like the uptick towards the end and am off for my ritual hot wings and a capt/coke. If summer had found us yet It would be a V/T ya all have a good week end