NEW YORK (TheStreet) -- Shares of SanDisk Corp (SNDK) were slipping, down 3.84% to $63.56 in early market trading Monday, after analysts at Morgan Stanley lowered its rating on the flash-memory chip maker this morning, citing increased headwinds.
The firm downgraded SanDisk to "equal weight" from "overweight" with a lower price target to $75 from $80.
Morgan Stanley analysts said the company is losing market share and will likely see lower margins.
The firm added that execution issues, especially with its biggest customer Apple (AAPL), are not over.
Morgan Stanley expects Samsung (SSNLF) to become one of the iPhone 6 suppliers.
Milpitas, Calif.-based SanDisk designs, develops and manufactures data storage solutions in a range of form factors using its flash memory, controller and firmware technologies.
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 largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue fell significantly faster than the industry average of 33.3%. Since the same quarter one year prior, revenues fell by 11.9%. 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 0.35, 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 1.35 is sturdy.
- 47.95% 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 2.92% is significantly lower than the industry average.
- Net operating cash flow has decreased to $308.87 million or 19.16% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Computers & Peripherals industry and the overall market, SANDISK CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full analysis from the report here: SNDK Ratings Report