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| Friday, October 20, 2006 |
Shares of SanDisk Corp. plummeted Friday after the flash memory maker posted better than expected third-quarter results but forecast a continued decline in flash memory prices.
The stock, which has traded between $37.34 and $79.80 over the last 52-weeks, was down $12.09, or 19.6 percent, at $49.64 in afternoon trading on the Nasdaq on quadruple its average trading volume.
On Thursday Sandisk posted a 4 percent decline in third-quarter profit but topped analysts' expectations.
However, the company said third-quarter average selling prices per megabyte of flash memory fell 25 percent sequentially, with expectations for fourth-quarter prices to drop 15 to 20 percent sequentially.
Citigroup analyst Craig Ellis cut his rating on the stock to "Hold" from "Buy" and said SanDisk is no longer a "new money idea."
"We are now incrementally more cautious in our SanDisk modeling, the company's near-term catalyst profile, and in longer-term share appreciation potential," he wrote in a note to clients. "Given these considerations, we can no longer argue for new money to be put to work in the name."
Other analysts were not as bearish on SanDisk's results.
In a client note, UBS's Alex Gauna wrote that results "were slightly shy of UBS expectations but exceeded consensus estimates on much better than expected bit growth and higher royalty and licensing revenue." He added that, "We were quite surprised by the magnitude of initial adverse reaction to SanDisk results."
W.R. Hambrecht analyst Daniel Amir said the company had a good quarter and speculated that investors may have been disappointed because SanDisk did not meet "whisper" numbers for the quarter.
"We view any sell-off in the stock today as a buying opportunity for investors," Amir wrote in a note to clients. |
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