SanDisk manufactures the flash memory cards for all types of mobile phones, camcorders, digital cameras, Apple’s iPad, USB flash drives, and embedded memory applications for consumers and enterprise markets.
With the recent pullback in the stock price over the past few weeks, investors have become skeptical, but is this the pause that may refresh?
CEO Retires
The announcement of the charismatic CEO retiring came as a surprise – and investors are not fans of surprises and uncertainty. Many analysts are arguing however that it may be a good time to buy. SNDK‘s growing importance as a provider of flash memory to the ultra hot smartphone industry, most importantly Apple, should keep the company’s top line looking great. One challenge is certainly the deflationary nature of flash memory prices, and also the fickle nature of memory pricing. Flash suppliers are often at the mercy of pricing and supply-demand dynamics.
The phenomenal sales of Apple's iPad is helping to drive demand for Sandisk's products.
Analysts Remain Optimistic
Some analysts such as Craig Ellis of Caris and Company feel conditions within the industry may remain favorable right into 2011, echoing a bullish sentiment report by Thomson Reuters. Additionally, analysts say flash demand is about to explode on a further surge in sales of mobile devices. iSuppli is expecting NAND revenue to rise 32 percent in 2010 to $17.9 billion. Fundamentals remain positive with a forward P/E of 11.2 while its industry trades with a P/E of 15.3. Return on equity is a fantastic 22.2%, beating the industry’s average of 11.8%. Price-to-book ratio is also attractive with a reading of 2.1, just slightly under the industry at 2.3.
SNDK is up approximately 45 percent this year, however it has seen a recent 15 percent correction since June 21. The stock is still mired beneath a descending trendline suggesting it may still be in a corrective phase. A breakout above this area of resistance would be the next technical entry area.
A breakout above this area of resistance would be the next technical entry area.
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Tags: embedded memory, Flash Memory, iPad, iPhone, NAND Memory, Sandisk, Smart Phones, SNDK