SanDisk Sinks on Analyst Downgrade

SAN FRANCISCO - SanDisk(SNDK Quote - Cramer on SNDK - Stock Picks) shares skidded Friday after a Wall Street analyst cut his rating on the chipmaker.

Citigroup's Craig Ellis said demand for NAND memory chips in the coming months appears weaker than initially expected, robbing SanDisk of a vital force necessary to drive up depressed prices for the chips.

In particular, Ellis pointed to modest orders from the European cell phone makers, whose high-end handsets are stuffed with NAND flash chips for data storage. And demand has eroded in Asia for the removable NAND flash cards that are compatible with cell phones.

The lackluster demand means the contract prices for NAND flash will not get the bump that Ellis expected, leading him to cut his rating on SanDisk from a buy to a hold.

"Checks on 2H contract pricing are mixed," Ellis wrote in a note to clients. "We think a negative reset is likely (-5%) with a sustained increase potentially as late as August, lasting only through September. In sum, a more disappointing outlook that just one month ago," Ellis wrote.

He lowered his 2008 EPS estimates from $1.40 to $1.23, and his 2009 estimate from $1.73 to $1.29, and reduced his target price for Sandisk shares from $35 to $27. Citigroup makes a market in SanDisk shares and has received compensation from SanDisk in the last 12 months for non-investment banking services.

Shares of SanDisk were off 9.7%, or $2.27, at $21.17 in midday trading Friday.

« Previous Page

1 2

Next Page »