SanDisk Shares Hit a 52-Week High - Analyst Blog
February 27 2014 - 2:00PM
Zacks
Shares of SanDisk Corp. (SNDK) hit a new
52-week high of $77.00 on Feb 26, eventually closing at $76.54. The
closing share price represents a one-year return of 51.6% and a
year-to-date return of 10.3%.
Growth Drivers
The price appreciation can be attributed to the growing demand
for solid state drive (SSD) products from SanDisk. The company has
also launched several new and innovative SSD products to cater to
the pent up demand.
With these launches, we expect SanDisk to strengthen its market
position against its competitors such as Micron
(MU) and Fusion-io (FIO). Per technology research
firm Gartner, the total SSD market is poised for considerable
growth, with revenues projected to more than double to $19.4
billion in 2014 from $9.2 billion in 2012. Thus, SNDK has the
potential to secure 10–12% revenue share by 2014, up from 3–4% at
the end of 2012.
Buoyed by the growing demand, SanDisk posted solid
fourth-quarter results with both its top and bottom lines
surpassing the Zacks Consensus Estimate. Revenues from commercial
and retail channels were strong, aided by higher mobile embedded
and SSD sales. Moreover, the acquisition of SMART Storage Systems
is expected to expand SanDisk’s offering in the Enterprise SSD
segment.
Management is positive about SSD revenue growth, favorable
product mix and better supply/demand metrics in 2014 but expects
modest price decline. The company expects bit supply to increase in
the range of 25% to 35%.
However, lackluster PC sales, European issues, competition from
its peers and currency fluctuations could hurt fundamentals to some
extent.
Other Stocks to Consider
Currently, SanDisk carries a Zacks Rank #3 (Hold). Investors
may, however, consider a better-ranked stock Lexmark
International (LXK), boasting a Zacks Rank #1 (Strong
Buy).
FUSION-IO INC (FIO): Free Stock Analysis Report
LEXMARK INTL (LXK): Free Stock Analysis Report
MICRON TECH (MU): Free Stock Analysis Report
SANDISK CORP (SNDK): Free Stock Analysis Report
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