Tuesday, August 22, 2006

Calls of Note Part 1

- Thomas Weisel Partners has some positive things to say about Sandisk (NASDAQ:SNDK) after spending time with co's management.

Firm's key takeaways are 1) Sandisk's cost per MB is likely to improve significantly in the coming quarters, 2) the pending M-Systems acquisition should have significant synergies and improve Sandisk's flash sourcing and/or royalty position, in firm's view, and 3) Sandisk appears confident it will be able to utilize MLC flash in the emerging SSD-based notebook market. Sandisk refrained from comments regarding short-term trends but acknowledged that Apple order activities at major flash vendors will have a significant impact on price stability for the duration of 2006. TWP continues to believe Sandisk is well positioned for significant long-term growth.

Firm reiterates their Outperform rating on the shares of Sandisk and view the acquisition as a near-term and long-term positive: 12-month $100 price target is based on 33x 2007 EPS estimate of $3.03 and a 1.25x PEG ratio on expected 26% EPS growth in 2007, which they believe is reasonable given Sandisk's leadership position in the flash memory industry and
likelihood of further positive estimate revisions.

Notablecalls: Back at my old trading desk I would be all over SNDK, pushing it higher in the pre mkt to dump the thing after the open. Think SNDK can move up today.

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