Credit Suisse Downgrades SanDisk (SNDK) to Neutral
Credit Suisse downgraded SanDisk (NASDAQ: SNDK) from Outperform to Neutral with a price target of $65.00 (from $75.00) following Q1 results. The analyst said strategic value doesn't offset strategy and execution uncertainty.
Analyst J. Pitzer said, "We remain bullish on the memory sector - consolidation, slowing Moore's Law, capital discipline, new applications/robust demand - and continue to have a positive view on MU in the US and Toshiba, Samsung and Hynix in Asia. Unfortunately, we see multiple SNDK specific issues that need to be addressed beyond the announced reorg/restructuring."
He added, "Our downgrade is best case late, worse case potentially reactionary but while transitory issues (SSD loss at AAPL, Embedded qualifications, Capacity mismatch) are bottoming in 1H, we remain concerned about 4 more enduring issues: (1) Enterprise strategy is perhaps overly optimistic (2) 3D NAND migration creates uncertainty around relative cost structures and industry bit growth, (3) High margin retail business slowing structurally and (4) SNDK must renegotiate licensing revenue in Aug-16, now 40% of CY15 EPS."
The firm lowered CY15/CY16 EPS from $4.00/$5.08 to $2.83/$4.58.
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Shares of SanDisk closed at $71.12 yesterday.