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Strategies & Market Trends : Z Best Place to Talk Stocks

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To: Kelvin Taylor who wrote (50108)	12/19/2003 8:16:04 AM
From: E.J. Neitz Jr	Read Replies (1) of 53068

SanDisk Corporation EPS (FY Dec) 2003E $2.19, 2004E $2.47 Outperform/Neutral (SNDK) $57.73 We are upgrading SanDisk (SNDK) from In-Line to Outperform in the context of our Neutral coverage view. We believe SNDK shares should be bought with a 3-6 month time horizon as: 1) Q1 estimates are conservative with the potential for upside due to very strong sell-through of Digital Cameras; 2) SNDK stock usually peaks 8 to 9 months before a cyclical earnings estimate and margin top. However, cyclical supply demand concerns for NAND flash won't materially affect the NAND pricing outlook until early 2005; 3) A deep December share price swoon has often been followed by a significant January rally; and 4) relative valuation is attractive, at 23.4x 2004E P/E versus the group at 33.3x. This idea is not suitable for all investor risk profiles as: 1) SNDK beta of 1.9 is one of the highest in our group; 2) the cyclical bear case on SNDK stock is clear and makes our buy thesis shorter term in nature; 3) SNDK sells 60% of its product at retail and planned price promotions during the second half of December and in January could negatively affect short term sentiment. Goldman Sachs- 8:00am 12-19-03

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