) reached a 52-week high of $56.49 on Friday, Mar 22, 2013
following solid fourth quarter 2012 results announced on Jan 23,
better visibility of NAND growth and growing demand for solid
state drives (SSDs).
The closing price of the memory-chip maker on Mar 22, 2013 was
$55.19, representing a robust one-year return of about 9.2% and
year-to-date return of about 23.4%. Average volume of shares
traded over the last three months stand at approximately 3966K.
SanDisk delivered a positive earnings surprise in the last four
quarters with an average beat of 17.6%. This Zacks Rank #3 (Hold)
company has a market cap of $13.4 billion and a long-term
expected earnings growth rate of 13.0%.
Solid Fourth Quarter Results, Growing SSD Focus
SanDisk reported adjusted earnings of 99 cents per share,
crushing the Zacks Consensus Estimate of 68 cents per share.
Though results fell short of the year-ago numbers by 19.9%, they
were 135.7% above the prior-quarter levels. The beat was mainly
attributable to solid recovery in the mobile embedded and retail
businesses, strength across geographies and favorable
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.
Within the OEM channel, mobile embedded, iNAND and SSDs grew
decently. Retail products witnessed solid growth due to
seasonality and market share gains in most geographies.
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.
The company expects the SSD contribution to be roughly 25.0% of
total revenue moving into 2014.
Strategic Tie-Up with NVIDIA
On Feb 25, SanDisk announced that its iNAND Extreme Embedded
Flash Drive will power
) 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 consumers/corporate to go mobile with tablets and
smartphones, the partnership between SanDisk and NVIDIA seems
beneficial for both.
The Zacks Consensus Estimates for 2013 and 2014 rose 5.4% and
8.7% to $3.33 and $3.76, respectively, in the past 60 days. Six
and two estimates moved upward for 2013 and 2014, respectively
over the same time frame.
However, only one estimate moved downward for 2013 in the past 60
We expect the shift toward NAND SSDs from HDD, muted NAND supply
growth and better NAND pricing to be the key drivers for
SanDisk's upcoming quarters.
Furthermore, SanDisk has an Earnings Expected Surprise Prediction
or ESP (Read:
Zacks Earnings ESP: A Better Method
) of +10.9%. This is very meaningful and a leading indicator of a
likely positive earnings surprise for shares.
Other Stocks to Consider
Other stocks in the technology industry that are currently
performing well and have a solid visibility include
) with a Zacks Rank #1 (Strong Buy) and
Micron Technology Inc.
) with a Zacks Rank #2 (Buy).
MICRON TECH (MU): Free Stock Analysis Report
NVIDIA CORP (NVDA): Free Stock Analysis
RAMBUS INC (RMBS): Free Stock Analysis Report
SANDISK CORP (SNDK): Free Stock Analysis
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