Davenport reits Strong Buy on Sandisk (NASDAQ:SNDK) saying the sell-off on CEO comments appears to be overdone. SNDK shares sold off aggressively yesterday (taking the broader market with them) following comments by CEO Eli Harari at a technology conference that U.S. memory card sales were “relatively soft” in April and demand was similar to what the company experienced during 1Q’08. Dr. Harari also voiced his belief that high energy prices are likely having some impact on US consumer spending.
Firm ntoes they are surprised by the magnitude of the market’s reaction (down $2.42 or 7.5%) to these comments as they are in-line with the tone management struck during its 1Q’08 conference call on April 17th when they suggested that U.S. consumer weakness would continue throughout the balance of the month. Further, Dr. Harari indicated that SNDK’s business remains robust outside the US, as was the case in 1Q’08 when non-US sales powered the company to ~5% revenue upside versus consensus despite US weakness. Finally, as was stated during the conference, SNDK’s 2Q performance is generally heavily back-end loaded with the vast majority of the company’s 2Q performance yet to be
recorded.
More importantly, SNDK indicated that it continues to expect business conditions to improve during the second half of the year as a more benign pricing environment and seasonal strength combine for much improved 2H results.
Notablecalls: SNDK's a buy here at $29 and change. See below.
Firm ntoes they are surprised by the magnitude of the market’s reaction (down $2.42 or 7.5%) to these comments as they are in-line with the tone management struck during its 1Q’08 conference call on April 17th when they suggested that U.S. consumer weakness would continue throughout the balance of the month. Further, Dr. Harari indicated that SNDK’s business remains robust outside the US, as was the case in 1Q’08 when non-US sales powered the company to ~5% revenue upside versus consensus despite US weakness. Finally, as was stated during the conference, SNDK’s 2Q performance is generally heavily back-end loaded with the vast majority of the company’s 2Q performance yet to be
recorded.
More importantly, SNDK indicated that it continues to expect business conditions to improve during the second half of the year as a more benign pricing environment and seasonal strength combine for much improved 2H results.
Notablecalls: SNDK's a buy here at $29 and change. See below.
They say "more benign pricing environment"? Maybe for a week, but this is like a casino, you guess which week. Commodity tech is no place to be.
ReplyDeleteKLIC is still my favorite, let's call it a gold metal play. Their new generation bonders can produce much finer gold wires for chip interconnects. KLIC is currently selling more gold for their bonders than they are bonders themselves, the new line represents a real savings to the chip designers and foundries. It's up about 30% since I mentioned it April 9, it could easily reach double digits.