Goldman Sachs’s James Schneider today raised his rating on shares of flash memory technology vendor SanDisk (SNDK) to Buy from Hold, with a $45 price target, writing that the company could benefit from “a return to supply/demand balance” for the “NAND” flash memory industry in the last quarter of this year, as Samsung Electronics (005930KS) and Korea’s SK Hynix (000660KS) both ratchet back their production capacity expansion this year.
Writes Schneider,
Based on our recent Asia trip and other checks, we now believe NAND suppliers are pushing out capacity expansion given current industry oversupply. Coupled with seasonally stronger demand in 2H, we expect supply cuts to drive improving NAND supply/demand, with a likely undersupply situation in 4Q.
Schneider also thinks SanDisk may have “outsized SSD [solid-state drive] exposure” relative to competitors. He is also swayed by the stock valuation, given that shares are supported by $15 in net cash per share and $12 in royalty revenue value.
Shares of SanDisk today are down 41 cents, or 1%, at $35.94.
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