“We believe that there’s an opportunity to make money shorting SanDisk on a trading basis,” he writes. “SanDisk’s stock has already lagged both the Philadelphia Semiconductor Index [SOX] and the broader market over the past few months, but we think industry oversupply will continue to put pressure on the stock in the near term.” He expects to see “material oversupply in the first half of 2007.”
Long-term, Ho remains Neutral on the stock. “Certain suppliers, most notably Samsung, have begun to ease their capital spending on the NAND market, which should help alleviate the oversupply situation by the second half of 2007,” he writes.
SanDisk shares today are down 73 cents at $44.04.