Valuation and target price Our 6-month price target of $55 is based on a P/E multiple of 15X applied to our normalized EPS estimate of $3.65. Our multiple is near the median of the semi peer group (10X-20X) given SanDisk’s solid growth profile, partly offset by a valuation discount given the volatile nature of earnings for companies with commodity memory exposure. Our normalized EPS estimate of $3.65 reflects our view of SanDisk’s earnings power over the next year given our view of mid-cycle supply/demand dynamics for NAND flash over that period.
1. The first question mark is EPS. Too many unknowns as of today, including real impact from the earthquake and recent expenses from R&D to new business (SSD).
2. The second question is PE (miltiple). When was the last time SANDK saw 15? When will it?
3. The third and the most important is whether investors deem 15 PE attractive on this market?
Below is on NAND prices. Falling like a rock. Tough business.
The bottom line: do not get disctracted by analysts, concentrate on price and volume. imho of course
P.S. Speaking of P/E Anyone can explain these? NFLX 75 CMG 47 PCLN 44 AMZN 80 OPEN 125 ------------------------------------
Persistent supply growth exercises stronger impact at channels
2011/06/03 Leading vendors’ persistent supply growth is exercising stronger impact at channels, leaving price trend has no room to go up during slow season. Where for the contract market, any price rebound is yet to be seen as OEMs are only expected to start preparing inventory for hot-season sales from July the earliest.
We think a clear demand visibility is only available after summer time, meaning pricing environment is in lack of a positive catalyst by then. We thus expect contract price will head to a slow downtrend throughout June to reflect impacts from growing supply among all major vendors.
Among all leading vendors, most are aggressively ramping up their capacity. Hynix will have its monthly output at M11 to hit ~100k in June, up from ~60k in early 2011. IM Flash is also expected to have a stable output ramp from its Singapore fab from the second quarter, with monthly output expected to reach 10-15k. SEC, which has already completed the DRAM-NAND capacity conversion at its Line 12, has already produced ~120k already.
As of noon session of June 3, spot price of 32Gb TLC and MLC flash chip has maintained flat at USD4.33 and USD3.88, respectively.
they all can say whatever they want. we see with our own eyes SDNK is a ~$48 stock that can jump anywhere in between 43 and 58 as it is pleased. as time passes buy the numbers go up (we are in an uptrend i.e.) and we act accordingly. their job is to fool around with their estimates and our to make $ buying and selling, rihgt?