Shares of SanDisk Corp. SNDK touched a 52-week low of $59.92 yesterday, before closing trade at $60.19. Year-to-date, shares of this flash memory storage solution provider have showed a negative return of roughly 39% whereas over the past one year shares went down 42.9%. SanDisk stumbled on the heels of Micron Technology, Inc’s MU lowered PC sales forecasts.
Micron anticipates that sluggish demand for personal computers (PCs) and lower Dynamic Random Access Memory (DRAM) will continue to negatively impact its financial performance in the fourth quarter. Therefore, it issued tepid revenue guidance for the upcoming quarter. The company expects revenues in the range of $3.45 billion to $3.70 billion (mid-point $3.575 billion), lower than the Zacks Consensus Estimate of $4.193 billion.
SanDisk generates a large part of its revenues from Commercial channels (65% of first-quarter revenues), which consist of sales of data storage solutions to original equipment manufacturers (OEM), system integrators and value-added resellers. Hence, the lower PC forecast has affected the shares of the company and has turned investors away from the stock.
Further, the revenue outlook provided by the company for full-year 2015 is disappointing. The company now expects revenues to be between $5.4 billion-$5.7 billion (previously $6.5 billion–$6.8 billion). The major reason for the lower outlook is the loss of the client SSD program with one large customer.
It is also worth mentioning that Apple Inc. is currently a major customer of SanDisk. However, we believe that if SanDisk doesn’t get a significant boost from its sales to Apple, it could be a near-term headwind for the company.
Going forward, lackluster PC sales, competition from peers and currency fluctuations will add to its woes.
Currently, SanDisk has a Zacks Rank #3 (Hold).
Stocks that Warrant a Look
Better-ranked technology stocks include Cirrus Logic Inc. CRUS and VASCO Data Security International Inc. VDSI, both sporting a Zacks Rank #1 (Strong Buy).
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