NEW YORK (TheStreet) -- Shares of SanDisk Corp. (SNDK) are higher by 1.32% to $97.50 in pre-market trading on Friday, following a ratings upgrade to "overweight" from "equal-weight" at Morgan Stanley (MS) .
The firm said it raised its rating on the company, which develops and manufactures data storage, as it's impressed by SanDisk's earnings performance, its capabilities in the margin enterprise sector, and its "continued unique willingness" to return cash to shareholders.
Morgan Stanley raised its price target on the stock to $115 from $100.
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, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, expanding profit margins and solid stock price performance. 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:
- SNDK's revenue growth has slightly outpaced the industry average of 9.3%. Since the same quarter one year prior, revenues rose by 10.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving 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 1.88, which demonstrates the ability of the company to cover short-term liquidity needs.
- SANDISK CORP has improved earnings per share by 7.5% 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 ($5.95 versus $4.37).
- The gross profit margin for SANDISK CORP is rather high; currently it is at 51.45%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 16.76% trails the industry average.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 78.66% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- You can view the full analysis from the report here: SNDK Ratings Report
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