On Apr 2, 2013, Zacks Investment Research upgraded SanDisk Corp. (SNDK) to a Zacks Rank #1 (Strong Buy).
With a stellar fourth quarter 2012 performance, better visibility of NAND growth and growing demand for solid state drives (SSDs), this storage device provider is an attractive investment opportunity. The stock’s return was 25.3% in the past one year. SanDisk’s shares set a new 52-week high price of $56.49 on Mar 22.
Why the Upgrade?
Positive news flow continued for SanDisk over the past few months, prompting the upgrade.
On Feb 25, SanDisk announced that its iNAND Extreme Embedded Flash Drive will power NVIDIA Corp.’s (NVDA) Tegra 4 mobile processor. The combined force of SanDisk’s iNAND Extreme and Tegra 4 is expected to woo mobile customers with fast processing and digital storage experiences. Given the increasing inclination of individual consumers/corporates to go mobile with tablets and smartphones, the partnership between SanDisk and NVIDIA seems beneficial for both.
On Jan 23, SanDisk reported solid fourth quarter 2012 results with earnings per share of 99 cents crushing the Zacks Consensus Estimate by 45.6%. Revenues of $1.54 billion dropped 2.2% year over year but jumped 21.1% sequentially. The quarter’s revenues came slightly above the Zacks Consensus Estimate and within the company’s guidance. The sequential revenue growth was mainly due to strong performances in both the original equipment manufacturer (:OEM) and Retail channels.
Management is positive about SSD revenue growth and better supply/demand metrics in 2013. The company is planning to focus more on iNAND technology, which is expected to drive its mobile-embedded business. They currently expect the launch of several new smartphones and tablets, Ultrabooks and other end-client PCs based on SSDs to drive growth.
The company expects the SSD contribution to be roughly 25.0% of total revenue moving into 2014.
Over the past 60 days, the Zacks Consensus Estimate for 2013 increased 4.3% to $3.41. The Zacks Consensus Estimate for 2014 increased 2.4% to $3.80.
In the past four quarters, the company has posted an average surprise of 17.6%. Considering the above factors, SanDisk has the potential to post a positive earnings surprise in the upcoming quarter.
Other Stocks to Consider:
Other stocks in the technology industry that are currently performing well and have a solid visibility include Rambus Inc. (RMBS) with a Zacks Rank # 1 (Strong Buy) and Intersil Corp. (ISIL) with a Zacks Rank #2 (Buy).
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