Citigroup is out with a pretty brilliant defense on Sandisk (NASDAQ:SNDK) noting the shares fell 7.5% after a morning conference presentation by CEO Eli Harari, a drag on the SOXX. Citi's review of broader NAND data suggests a buying opportunity has emerged.
The typically upbeat Harari was noticeably restrained. That said, he indicated Europe remains strong (44% of sls), and left OEM sales un-addressed (all geos; 42% of sls).
Firm notes that understandably they braced for weak April US retail sell through data (cards+drives+MP3 players) in the afternoon's NPD release. However, we found SNDK bit growth was just 300 bps below seasonal (helped by easy comp) while ASPs were actually 300 bps better than seasonal. Separately, theyconfirmed with SNDK that its Europe and Asia market share trends are firm, the OEM biz solid. Firm concludes SNDK is likely working to keep Street expectations in check, in particular as: 1) much of the Mom's/Prom's/Dad's/Grads selling season lies ahead, and 2) some competitors have recently raised 2Q GM ests (2Q08 to be the trough). Overall, they are comfortable with their 2Q08, 3Q08 and 2008 ests.
While end demand risks persist, the body of evidence Citi sees continues to point
toward steadily firming fundamentals into and through 3Q08.
They think positive EPS revision catalysts remain in play in July through October and on a target of $35, but with upside to $40 if multiples inflate seasonally.
Reits Buy.
Notablecalls: I think Citi is doing the right thing here defending SNDK. What we saw yesterday was just profit taking following the recent run (can't blame the bold ones who bought the stock in the low 20's taking some of it off the table). Citi has done a good job covering SNDK recently and I think the stock is a bounce candidate here.
For the record, Lazard and JPM are somewhat cautious on SNDK this AM. - fyi only.
The stock's a buy below $30.
The typically upbeat Harari was noticeably restrained. That said, he indicated Europe remains strong (44% of sls), and left OEM sales un-addressed (all geos; 42% of sls).
Firm notes that understandably they braced for weak April US retail sell through data (cards+drives+MP3 players) in the afternoon's NPD release. However, we found SNDK bit growth was just 300 bps below seasonal (helped by easy comp) while ASPs were actually 300 bps better than seasonal. Separately, theyconfirmed with SNDK that its Europe and Asia market share trends are firm, the OEM biz solid. Firm concludes SNDK is likely working to keep Street expectations in check, in particular as: 1) much of the Mom's/Prom's/Dad's/Grads selling season lies ahead, and 2) some competitors have recently raised 2Q GM ests (2Q08 to be the trough). Overall, they are comfortable with their 2Q08, 3Q08 and 2008 ests.
While end demand risks persist, the body of evidence Citi sees continues to point
toward steadily firming fundamentals into and through 3Q08.
They think positive EPS revision catalysts remain in play in July through October and on a target of $35, but with upside to $40 if multiples inflate seasonally.
Reits Buy.
Notablecalls: I think Citi is doing the right thing here defending SNDK. What we saw yesterday was just profit taking following the recent run (can't blame the bold ones who bought the stock in the low 20's taking some of it off the table). Citi has done a good job covering SNDK recently and I think the stock is a bounce candidate here.
For the record, Lazard and JPM are somewhat cautious on SNDK this AM. - fyi only.
The stock's a buy below $30.
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