Estimates raised on SNDK. Stock up strongly in premarket. Here is the analyst blurb, lifted from a Yahoo post without further attribution. Apparently it was from someone at Thomas Weisel.
Executive Summary
„h We reiterate our Outperform rating on Sandisk and are raising our 4Q03 and FY04 revenue and EPS estimates based on strong holiday sales of flash cards, and a healthy Supply/Demand outlook for 2004. We are raising our revenue and EPS estimates for 4Q03 to $378mn and $0.88, from $352mn and $0.71 (consensus is $352mn and $0.73). We are also raising revenue and EPS estimates for FY04 to $1.8bn and $2.85, from $1.7bn and $2.50 (consensus is $1.56bn and $2.50).
„h * Checks suggest that 4Q03 was exceptional, with potentially unfulfilled demand driving better than typical seasonality in 1Q04. Our checks with hardline retailers and online merchants for holiday sales of digital still cameras and flash cards indicate that sell-through was excellent and a variety of models were sold out. As a result, we believe there may be significant pent up demand for flash memory cards in 1Q04 that could offset typical seasonality.
„h * Checks further reveal that several companies that utilize NAND in their products believe they may be challenged to meet their customer demand based on lack of supply from Samsung and Toshiba. In our view, the fact that flash card and USB flash drive manufacturers continue to experience tight supply and firm pricing from flash memory component manufacturers is much more significant than spot market price softening, which in our opinion, is largely irrelevant.
„h * We do not expect new entrants to upset the NAND supply/demand balance in 2004. While new entrants will bring product to market, we believe over the next 12 months they will struggle to be cost competitive with Samsung and Toshiba who have a significant experience advantage. Additional supply capacity still lies mostly in the hands of Samsung, and it appears they will be a rational player in 2004.
We believe new product and/or customer announcements at the Consumer Electronics Show could be a catalyst for shares and are likely to reinforce Sandisk's position as an industry leader.
We reiterate our Outperform rating on shares of Sandisk. Our 12-month price target remains $100, 35x our new CY04 EPS estimate.
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