It appears that the flash memory maker SanDisk Corp. SNDK is going through a tough time. Since the beginning of 2015, shares of the company plunged more than 33%, mostly in the last three trading days following the first-quarter 2015 guidance cut.
On Mar 26, the company lowered the revenue guidance for the first quarter citing lower-than-expected sales of enterprise products, certain product qualification delays and lower pricing in some areas of the business. Furthermore, SanDisk forecasts that the aforementioned factors will continue to negatively impact its financial performance throughout the year.
Prior to this, the company, in January, posted tepid results for the fourth quarter of 2014. Though the company’s adjusted earnings of $1.15 per share were in line with the Zacks Consensus Estimate, it witnessed a year-over-year decline of 28%.
On top of that, total revenue of $1.735 billion lagged management’s guided range of $1.800–$1.850 billion. Also, reported revenues fell short of the Zacks Consensus Estimate of $1.771 billion. Reported revenues missed management’s guided range primarily due to supply constraints.
As a result of these bearish factors, there have been frequent downward estimate revisions of late. In fact, the Zacks Consensus Estimate for first-quarter 2015 dropped more than 15% to 62 cents per share over the last 7 days. Similarly, the Zacks Consensus Estimate for 2015 declined more than 5% to $4.54 per share over the same time frame.
It is also worth mentioning that Apple Inc. AAPL is currently a major customer of SanDisk. However, reportedly, the company did not get a significant boost from its sales to Apple, which in turn could be a near-term headwind for the company. Furthermore, the company previously mentioned that it lost a major customer during the fourth quarter.
The recent developments in addition to the intensifying competition and uncertainty surrounding smartphone makers remain the headwinds. Going forward, lackluster PC sales and currency fluctuations add to the woes.
Currently, SanDisk carries a Zacks Rank #5 (Strong Sell).
Stocks to Consider
A couple of technology stocks that are performing well at the current level include Cirrus Logic Inc. CRUS and Avago Technologies Limited AVGO, sporting a Zacks Rank #1 (Strong Buy).
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