Macro Concerns About SanDisk - Citi

SanDisk (SNDK) shares are trading off this morning after Citigroup’s Craig Ellis cut his rating on the stock to Hold from Buy. His price target drops to $27 from $35. Ellis wrote in a research note that the change reflects “cautious findings in this week’s global NAND pricing and product end demand fieldwork.”

Ellis said he had expected a shortage of NAND flash memory to emerge in mid-2008, but that demand weakness has eroded his theory. He’s seeing caution from European handset makers and slowing card demand in China and the rest of Asia. He thinks a “negative reset” is coming on contract NAND pricing.

Ellis cut his 2008 EPS estimate to $1.23 from $1.29; for 2009 he goes to $1.40, from $1.73. His new estimates are well below the Street consensus of $1.46/$1.86.