|
Obliterated, beaten down and beleaguered would be the most appropriate words used to describe shares of SanDisk Corp. (SNDK) that have fallen 55.5% year to date, and are down even more percentage-wise from a 52-week high of $59.75.
That is why JPMorgan analyst Paul Coster鈥檚 recent downgrade of the flash supplier, which sent SanDisk shares below the Jackson line (that鈥檚 $20 a share) for the first time since 2004, could mark a short term bottom. According to the Dow Jones Newswire, in cutting the rating on SanDisk from 鈥渙verweight鈥?to 鈥渘eutral,鈥?Coster writes that profit warnings from flash players Intel (INTC), Toshiba (TOSBF.PK), and Sony-Ericsson (SNE) is troubling, and that despite the fact that 鈥渢he SanDisk multiple is probably bottoming out, we see downside to earnings per share, and SanDisk might not out-perform in a beta-led rally owing to overcapacity concerns.鈥?
 Ignoring the fact that JPMorgan is the same firm that upgraded SanDisk from 鈥渘eutral鈥?to 鈥渙verweight鈥?on Jul. 18 of last year (SanDisk traded for $57.15 a share at the time) which would very much make this a good contrarian call, that statement is probably true, because in the end, a reversal of the flash memory price slide would have to occur for there to be any meaningful price appreciation.
However, an ultra-low valuation should keep the decline in check because over the past 60 days, analyst estimates have largely discounted a continued fall in flash prices which has been at the heart of SanDisk鈥檚 stunning fall from grace. The profit estimate for 2008 now stands at $1.76 a share versus a previous estimate of $2.32 and for 2009, $2.00 compared to $2.61 analysts had predicted two months ago. Way oversold and highly shorted, SanDisk is a good bounce candidate.
Wholesale Napkin Ringsyellow croakers |
