SanDisk (SNDK): Bear Of The Day

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SanDisk (SNDK): Bear Of The Day

By Zacks Investment Research on July 28, 2009 | More Posts By Zacks Investment Research | Author's Website

SanDisk (SNDK) posted better-than-expected 2Q09 results based on increased pricing, but provided a conservative guidance for Q3. The company reduced its cost of production significantly.

We believe this is a seasonally strong quarter for the company but maintaining its profitability tempo will be a tough challenge for the company. SanDisk also believes that industry pricing is likely to be stable to modestly down in the second half of the year. Samsung royalties will start impacting revenue in the second half of Q4.

The company has a history of losses, and a single quarter of good performance does not change our perception significantly. We therefore maintain our Sell rating on SNDK shares but increase our six-month price target to $10.00.

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