NEW YORK (TheStreet) -- SanDisk Corp. (SNDK) stock is up 0.07% to $76.83 in mid-morning trading on Thursday after Western Digital Corp. (WDC) agreed to acquire the company for $19 billion yesterday, leading Deutsche Bank to increase its price target on the stock to $85 from $60.
The firm, however, lowered its fourth quarter earnings per share estimate to 85 cents from $1, but maintained its "hold" rating, as the company faces weak demand.
SanDisk's stock price target was also raised to $86 from $61 at BMO Capital Markets, which maintained a "market perform" rating on the flash storage maker.
"SanDisk's proposed acquisition by Western Digital is at a pretty hefty premium to where the stock was trading at before the potential acquisition started to be discussed in Bloomberg," BMO Capital Markets said in an analysts note.
Separately, TheStreet Ratings team rates SANDISK CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
We rate SANDISK CORP (SNDK) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue fell significantly faster than the industry average of 37.3%. Since the same quarter one year prior, revenues fell by 24.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Despite currently having a low debt-to-equity ratio of 0.37, 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 1.31 is sturdy.
- SANDISK CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, SANDISK CORP reported lower earnings of $4.23 versus $4.37 in the prior year. For the next year, the market is expecting a contraction of 27.0% in earnings ($3.09 versus $4.23).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Computers & Peripherals industry. The net income has significantly decreased by 70.4% when compared to the same quarter one year ago, falling from $273.95 million to $80.97 million.
- You can view the full analysis from the report here: SNDK