SanDisk Corp (NASDAQ:SNDK)

CAPS Rating: 3 out of 5

SanDisk is a leading supplier of flash memory cards, which allow digital cameras and other devices to keep their data when the power’s turned off.

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Member Avatar iPittytheFool (81.21) Submitted: 8/6/2014 10:26:06 PM : Outperform Start Price: $93.51 SNDK Score: +4.11

It is a trusted brand that has a 3.0 jump drive finally. I think they will compete better now in thumb drives. Also in micro SD cards they are top of the line. Chances are you have one in your phone or in use somewhere.

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Member Avatar racoveanul (80.22) Submitted: 7/3/2014 11:47:37 AM : Outperform Start Price: $106.41 SNDK Score: -6.27

I picked this stock because it is rated 10 by Stockscouter, it has a dividend and a beta computed by Yahoo Finance of more than 1.

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Member Avatar Flygal5 (99.27) Submitted: 6/5/2014 11:50:29 AM : Outperform Start Price: $99.22 SNDK Score: -1.46

my husband recommends, they are the quality provider and coming out with higher capacity storage that is in big demand

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Member Avatar OKwarrior (31.84) Submitted: 4/20/2014 12:49:05 PM : Outperform Start Price: $82.97 SNDK Score: +14.23

showing up on the magic formula list w/ reasonable debt, strong cash flow. SNDK is on the rebound from a bad 2012. Their products are ubiquitous.

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Member Avatar wackjob69 (21.53) Submitted: 3/12/2014 3:32:50 PM : Outperform Start Price: $74.34 SNDK Score: +28.67

3d nand will be a game changer.

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Member Avatar bryanb426 (< 20) Submitted: 3/7/2014 3:16:52 PM : Outperform Start Price: $74.00 SNDK Score: +29.89

expansion of SSD storage in mainstream computer users

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Member Avatar DesiBull (69.55) Submitted: 12/28/2013 5:44:35 AM : Outperform Start Price: $69.64 SNDK Score: +36.05

Good Technicals

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Member Avatar ROEoutshinesGOLD (99.21) Submitted: 10/17/2013 3:40:13 PM : Outperform Start Price: $42.00 SNDK Score: +97.85

4**** STARS S&P Ranking (buy)

CORPORATE OVERVIEW:

SanDisk Corp. (SNDK) designs, makes and markets flash storage card products used in a wide variety of consumer electronics products such as digital cameras, mobile phones, laptops, Universal Serial Bus, or USB, drives, gaming devices and MP3 players. Flash storage technology allows data to be stored in a durable, compact format that retains the digital information even after the power has been switched off. SNDK also provides high-speed and high-capacity storage solutions, known as solid- state drives, or SSDs, that can be used in lieu of hard disk drives in a variety of computing devices, including personal computers and enterprise servers.

SNDK focuses on three primary markets:
1) Mobile Phones
2) Consumer
3) Computing

(1) Mobile Phones:
SNDK's cards are experiencing increasing demand as multimedia features such as video and Internet access become more prevalent. The company is a leading supplier of the microSD and Memory Stick Micro product lines of removable storage cards used in mobile phones.

(2) Consumer Market:
SNDK provides flash storage products for imaging, gaming, audio/video and global positioning system (GPS). Flash storage cards are used as the film for all major brands of digital cameras. Its cards are also used to store video in solid-state digital camcorders and to store digital data in many other devices, such as maps in GPS devices.

(3) Computing market:
SNDK sells USB flash drives that allow consumers to store computer files, pictures and music on keychain-sized devices and then transfer these files between laptops, notebooks, desktops and other devices that incorporate a USB connection. SNDK is currently developing SSDs for the mainstream notebook and desktop computer markets,and it believes that SSDs will become a major application for NAND flash memory over the next several years as they are increasingly likely to replace hard disk drives.

We believe SNDK's primary competitors include Hynix Semiconductor, Intel, Micron, Samsung and Toshiba.
Although competitive pressures are strong within the industry, SNDK also holds tight relationships with many of its peers due to supply agreements that it has with some of these manufacturers.

CORPORATE STRATEGY:

Most of SNDK's products are manufactured by combining NAND flash memory with a controller chip. The vast majority of its NAND flash memory supply requirements are purchased through its flash venture relationship with Toshiba Corporation, which provides the company with memory wafers. From time to time, SNDK also purchases flash memory on a foundry basis from NAND flash manufacturers including Toshiba, Samsung, and Hynix Semiconductor. SNDK typically designs its controllers in-house and has them manufactured at third-party foundries.

SNDK develops and owns leading-edge technology and patents for flash memory and data storage cards. The company has an extensive patent portfolio that has been licensed by several leading semiconductor companies. Over the past three years, on a cumulative basis, SNDK's license and royalty revenues exceeded $1 billion.

FINANCIAL TRENDS:

According to SNDK, the market for flash storage is price elastic, meaning that a decrease in the price per megabyte results in demand for higher capacity and the emergence of new applications for flash storage. We believe pricing in the NAND flash industry depends on the balance between supply and demand, and in periods of oversupply, price declines can more than offset unit growth, leading to a decline in product revenues. However, when the pricing decline is greater than the cost decline, which typically occurs during the periods of an industry-wide oversupply, it could result in a decline in SNDK's product gross margin.
Following a 35% revenue increase in 2010, sales rose 17% in 2011.
Subsequently, revenue fell 11% in 2012, hurt by an inventory correction and significant pricing pressure during the first half of the year.

SNDK obtains a majority of its raw material wafer requirements from a joint venture it has established with Toshiba.
SNDK holds a 49.9% ownership position in existing Toshiba and SanDisk venture entities.
Each venture purchases wafers from Toshiba at cost and then resells those wafers to SNDK and Toshiba at cost plus a mark-up.
Given this relationship, SNDK's cost of goods sold is heavily impacted by changes in the Japanese yen/U.S. dollar exchange rate. We estimate that about three-fourths of SNDK's total cost of goods sold is exposed to the yen. We view any Japanese yen softness versus the U.S. dollar as an incremental positive for SNDK and vice versa. The company has previously stated that a 10% movement in the yen-to-dollar exchange rate impacts its gross margin by about 4 percentage points. We believe that there is typically about a one to two quarter lag between the yen currency movement and its impact on the gross margin.

35% S&P 3-Year Projected Earnings Per Share Compound Annual Growth Rate (CAGR)

Our buy opinion is primarily based on valuation, near-term projected pricing stability from capacity rationalization efforts, and our belief that SNDK is poised to benefit from new applications, namely solid state drives:
- We see the end-demand prospects driven by the adoption of Ultrabooks, new tablets and smartphones, and eventually greater penetration by consumers into the cloud.
- We see greater use of flash, which has greater density, in servers/datacenters, supporting growth.
- We expect SNDK to remain the technology leader as it moves to more advanced technology nodes.
- We see the shares being aided to some extent by net cash per share (including long-term securities) of over $18 as of the end of June 2013.

We forecast that sales will rise 19% in 2013 and 9.1% in 2014, following a decline of 11% in 2012:
- We believe SNDK is not only benefiting from a stabilization in flash memory prices but also a shift toward higher margin product offerings.
- We see increasing flash consumption and innovation on the horizon from next-generation smartphones, tablets, Ultrabooks, as well as smarter televisions, driving demand.
- We see solid state drive demand rising, aided by the evolution of Ultrabooks as well as migration to the cloud, supporting enterprise spending.

We project annual operating gross margins of 45% in 2013 and 44% in 2014, compared to a 34% margin in 2012:
- We think SNDK will benefit from higher growth in megabytes, but we expect pricing pressure for the foreseeable future.
- We see margins being aided by cost reductions over time as SNDK transitions to more advanced processes.
- We estimate research and development costs absorbing 12% of sales in 2013 and 11% in 2014.

We forecast operating EPS of $4.45 for 2013, $4.95 for 2014 and $5.42 for 2015, including stock-based compensation expense.
- We anticipate a healthy supply/demand landscape.

Our 12-month target price of $73 reflects a blend of P/E and price/sales analyses:
- We obtain a $76 price based on 14.1X our 2015 EPS estimate.
- We derive a $70 price by applying a 2.4X multiple to our 2015 sales per share estimate.
Both multiples are near peer averages.

Risks to our recommendation and target price include the potential for more aggressive price erosion than we forecast, and weaker end-market demand than we foresee.

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Member Avatar ImFive (28.24) Submitted: 10/6/2013 11:06:16 PM : Outperform Start Price: $61.59 SNDK Score: +44.29

Saw a Sandisk disk drive the other day at Wall-Mart. 32 gigs, the memory part was smaller than the USB plug part! This company knows how to impress investors.

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Member Avatar mcclardbc (33.91) Submitted: 7/19/2013 12:24:50 PM : Outperform Start Price: $60.97 SNDK Score: +46.89

Sandisk has its hands everywhere in tech. It's a staple for people that want excellent value in products.

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Member Avatar HP2006 (76.93) Submitted: 2/2/2013 2:35:42 PM : Outperform Start Price: $49.62 SNDK Score: +70.35

flash drives, smartphones and tables leading the way

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Member Avatar FundamentalFrank (78.09) Submitted: 1/24/2013 9:24:06 AM : Outperform Start Price: $46.24 SNDK Score: +84.12

SSDs are becoming more and more important and the volume is constanty going up. Tablets and Mobile phones are driving demand, too.
The price go up again and costs are decreasing all the time. Margins should be fine soon again.

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Member Avatar lanwanguru (76.89) Submitted: 11/16/2012 12:20:24 PM : Outperform Start Price: $38.44 SNDK Score: +115.71

Surrounded by turkeys. As the chaff falls away, it will only help them.

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Member Avatar beefangusbeef (58.09) Submitted: 9/7/2012 10:39:00 AM : Outperform Start Price: $42.90 SNDK Score: +96.51

I have gone up and down on this stock on CAPS. Probably should have in real life too. They lead the flash market in every way. You know, the storage on everything these days. It's one of those odd tech companies (like NVDA) that does pretty much everything right, makes a product everyone uses, but gets passed over. Oh, and they make better music players than Apple. No need to go to court over handing down your songs with Sandisk.

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Member Avatar brianc442 (37.39) Submitted: 6/4/2012 8:49:24 PM : Outperform Start Price: $31.47 SNDK Score: +164.31

Way oversold. I see huge upside for this company.

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Member Avatar JackSparra (27.98) Submitted: 5/7/2012 3:08:36 PM : Underperform Start Price: $35.38 SNDK Score: -139.56

Maybe a buy at 20, i was bullish on this stock but i fear it could be continued bad news for a longtime.

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Member Avatar Olemacdee (87.83) Submitted: 4/19/2012 9:06:51 PM : Outperform Start Price: $33.86 SNDK Score: +153.40

Extremely oversold afterhours after annoucing earnings and forward guidance. Loaded up!

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Member Avatar Onigato (84.29) Submitted: 4/19/2012 9:26:46 AM : Outperform Start Price: $39.88 SNDK Score: +108.82

Solid state Hard Drives are definately the future, and SanDisk is one of the leaders in the field.

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Member Avatar TMFCop (84.75) Submitted: 4/5/2012 10:34:28 AM : Outperform Start Price: $43.43 SNDK Score: +89.24

Yeserday's sell off was overdone. The market for SSDs remains robust and with enterprise-level adoption of storage growing, an inflection point will be achieved that should catapult the likes of SNDK higher.

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Member Avatar RagingBull0 (54.37) Submitted: 11/2/2011 10:53:46 AM : Outperform Start Price: $32.93 SNDK Score: +130.63

The cheap way of getting into Apple. Even at current price, with such a low P/E and good growth prospects, it's a great deal.

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