SanDisk Upped to Strong Buy on Positive Estimate Revisions
Zacks Investment Research upgraded SanDisk Corp. (SNDK) to a Zacks Rank #1 (Strong Buy) on Jul 16, 2014 on account of upward estimate revisions. SanDisk’s shares soared 77.41% over the past one-year period.
Moreover, SanDisk delivered positive earnings surprises in the last four quarters with an average beat of 18.75% and another one may well be on the cards as suggested by the estimate revisions.
Why the Upgrade?
Over the last 60 days, SanDisk witnessed two upward revisions for the current quarter and three upward revisions for fiscal 2014. The Zacks Consensus Estimate for the current quarter went up 3 cents to $1.30 per share and that of fiscal 2014 went up 12 cents to $5.76.
Moreover, SanDisk has an Earnings ESP of +3.85% which when combined with its Zacks Rank #1 makes us fairly confident of the company beating the Zacks Consensus Estimate when its reports second-quarter 2014 results after market closes today.
Additionally, we remain optimistic about SanDisk’s margin expansion due to higher mix of high-margin embedded and client and enterprise-class SSD solutions and products. Moreover, SanDisk is witnessing an increased demand for its SSD products which will boost top line. Additionally, decline in cost per gigabyte and increase in the average selling price per gigabyte bodes well for the company.
Moreover, SanDisk has made a strategic acquisition of Fusion-io, a provider of flash-based PCIe hardware and software solutions. This will further strengthen SanDisk’s position in the storage market as PCIe-based SSDs are in high demand among enterprises dealing in online transaction processing and data warehousing.
We believe that the synergies from these acquisitions will help SanDisk to emerge as a major player in the fast growing flash memory market, thus lending greater stability to its revenue stream.
However, tepid PC sales, competition from Micron Technology (MU) and Western Digital (WDC), and currency fluctuations remain the headwinds.
Apart from SanDisk, investors may also look at NVIDIA Corp (NVDA) which sports a Zacks Rank #1.
Read the Full Research Report on WDC
Read the Full Research Report on SNDK
Read the Full Research Report on MU
Read the Full Research Report on NVDA
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