SanDisk shares gain after bullish analyst report

Shares of SanDisk Corp. shot higher Tuesday following a bullish analyst report.

THE SPARKS: The Pacific Crest brokerage initiated coverage of SanDisk stock with an "outperform" rating and a target price of $47.

Separately, Japanese electronics maker and information technology service provider Fujitsu Ltd said it would use the 32-gigabyte SanDisk iSSD integrated storage device in the Lifebook U772, UH772 and UH572 models, which it introduced Tuesday. SanDisk also said Lenovo Group, the world's second-largest PC maker, based in Beijing and in Research Triangle Park, N.C., will use its drives in more laptops.

THE BIG PICTURE: SanDisk Corp., based in Milpitas, Calif., makes memory chips for electronics like smartphones and tablets. The company has struggled recently with weak demand and low selling prices, and its first-quarter earnings fell short of Wall Street expectations.

THE ANALYSIS: In launching coverage, Pacific Crest analyst Monika Garg wrote optimistically about the potential for growth in the solid-state drive, or flash memory, market. She said solid-state drives could produce 25 percent of SanDisk's revenue by 2014, up from 3 percent in 2011. She also contended that SanDisk trades at a 70 percent discount to its asset value and called this "an opportune time to consider long positions."

SHARE ACTION: SanDisk's stock rose $1.67, or 5.3 percent, to $33.33 by midday, making it the biggest percentage gainer on the Standard & Poor's 500 index.