SanDisk Enters Its Seasonal Sweet Spot

Citigroup says its mid-quarter check on SanDisk's (SNDK) fundamentals suggests positive EPS revision pressure is forming, in line with seasonal norms which in years past have been a positive for the stock. Demand risks exist (handset), though Citi thinks rising contract pricing from June to October is a reasonable outlook. SNDK is Citi's mid-cap top pick on contract pricing and EPS revision catalysts.

Since 2003, Street EPS estimates have jumped 22% and 43% in 2Q and 3Q, respectively (shares by 18% and 34%). Firm recalls that contract pricing risks shift to the upside from May to September (back to school and pre-holiday demand), though broader chip industry orders are most benign from June to August. NAND's comparative seasonal strength should augur well for SNDK shares if fundamental and estimate trends emerge in 2Q08/3Q08, as they think possible.

Reiterates Buy.

Notablecalls: Worth maybe one point upside here.

Comments

[DanielJacome]

Avian Research out of Boston is the go to shop for SNDK color.

[DanielJacome]

nice call, notable: stock's up more than a buck out of the gate