Citi was hoping macro trends such as rising contract pricing would power SanDisk (SNDK), . However, “under-supply is not emerging” and the “recent demand weakness” is undermining this thesis. So they’ve cut the stock:
Bulls will push “cheap” valuation and a potential 3Q08 contract up-
- company-specific C2H08 bit growth, inventory, and GM risks are growing
- the stock’s seasonal peak is nearing
- buyers are likely to sell strength ahead of late-C08’s pricing and stock risks
Citi downgrades SanDisk (SNDK) from Buy to HOLD, target price from $35 to $27.