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Will This Price Target Increase Help SanDisk (SNDK) Stock Today?

Stocks in this article: SNDK FIO

NEW YORK (TheStreet) -- SanDisk (SNDK) stock has had its price target increased to $125 from $105, Sterne Agee said Tuesday. The firm reiterated a "buy" rating following the announcement SanDisk would purchase Fusion-io  (FIO) in an all-cash acquisition. 

"We believe it underlines SNDK's L-T strategy of focusing on Enterprise SSDs and getting its accretive revenue mix from SSDs to 40% by 2017," analyst Vijay Rakesh wrote in the report. "With the deal closing in 3Q14, we believe conservatively FIO can drive SNDK F15E EPS to ~$7."

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Separately, TheStreet Ratings team rates SANDISK CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate SANDISK CORP (SNDK) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 2.4%. Since the same quarter one year prior, revenues rose by 12.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although SNDK's debt-to-equity ratio of 0.28 is very low, it is currently higher than that of the industry average. To add to this, SNDK has a quick ratio of 1.89, which demonstrates the ability of the company to cover short-term liquidity needs.
  • SANDISK CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SANDISK CORP increased its bottom line by earning $4.37 versus $1.69 in the prior year. This year, the market expects an improvement in earnings ($6.00 versus $4.37).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Computers & Peripherals industry. The net income increased by 61.8% when compared to the same quarter one year prior, rising from $166.23 million to $268.95 million.
  • The gross profit margin for SANDISK CORP is rather high; currently it is at 54.96%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 17.78% trails the industry average.
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