NEW YORK (TheStreet) -- Shares of SanDisk Corp. (SNDK) surged 5.12% to $84.27 in morning trading today after Goldman Sachs added the stock to its "Conviction Buy List."

"We are adding SanDisk shares to the 'Conviction Buy List' given our increased confidence in 2015 supply/demand, gross margin expansion, and attractive valuation (a 7% 2015 FCF yield) post the pull-back (SanDisk is down 18% YTD following a weak 4Q14 earnings report vs. the SOX up 2%)," Goldman Sachs said.

Goldman Sachs' 12-month price target of $106, up from $100 is based on 16X, up from 15X on new product potential, normalized EPS of $6.05 [ex. interest], plus net cash.

Analysts expect upside to consensus estimates and the stock due to:

1. Healthy supply/demand in 2015 - we have increased confidence in 2015 supply/demand as NAND orders to the SPE companies remained low in both 3Q and 4Q14, and demand should benefit from higher NAND per phone and better consumer cash flow.

2. 400 bps of gross margin expansion - SanDisk's margins benefit from a weaker yen, 200 bp for each 10% weakening in the yen, mix, and cost reductions.

3. SanDisk recently launched an all flash storage array product that is well suited for hyper-scale customers, which we believe has the potential to drive estimate upside, higher margins, and multiple expansion and is not in base case consensus numbers. The all-flash and hybrid flash array market was $11 billion in 2014, and the NAND chip semi market was $28 billion. We believe traction with this product could change the intermediate to longer-term investor debate on SanDisk.

Key risks include 3D NAND, SanDisk's royalty agreement with Samsung (SSNLF) , NAND S/D, and margins.

Milpitas, CA-based SanDisk Corporation designs, develops, markets and manufactures data storage solutions in a variety of form factors using its flash memory, controller, firmware and software technologies. The company's solutions include solid state drives (SSDs), removable cards, embedded products, universal serial bus (USB), drives, digital media players, wafers and components.

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

"We rate SANDISK CORP (SNDK) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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

• The revenue growth significantly trails the industry average of 31.5%. Since the same quarter one year prior, revenues slightly increased by 0.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
• The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Computers & Peripherals industry and the overall market on the basis of return on equity, SANDISK CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
• 48.54% is the gross profit margin for SANDISK CORP which we consider to be strong. Regardless of SNDK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SNDK's net profit margin of 11.63% is significantly lower than the industry average.
• Despite currently having a low debt-to-equity ratio of 0.31, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.50 is sturdy.
• SANDISK CORP's earnings per share declined by 40.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, SANDISK CORP reported lower earnings of $4.23 versus $4.37 in the prior year. This year, the market expects an improvement in earnings ($5.29 versus $4.23).
• You can view the full analysis from the report here: SNDK Ratings Report