Seeking Alpha

Goldman's SanDisk downgrade: firm sees supply growing, margins peaking

  • Goldman's James Schneider, who has cut shares to Neutral, thinks NAND flash supply could grow faster in the next few quarters than previously expected, and that margins "are likely to peak in 2H13" thanks to price pressure and slowing cost reductions.
  • SanDisk (SNDK -2.3%) shares nearly doubled from last summer's lows thanks in large part to healthy pricing, rising margins, and expectations NAND supply growth will remain limited. These factors have also given a big lift to Micron (MU +0.6%) shares.
  • Yesterday, Morgan Stanley asserted there is "no more upside" in the memory chip space, while predicting DRAM growth/ASPs/margins will peak in Q3.
  • MS observes Samsung (SSNLF.PK), Hynix, SanDisk partner Toshiba (TOSBF.PK), and Micron's Elpida and Inotera units are all set to expand capacity in response to strong smartphone, tablet, and SSD-related orders.
  • MS: "Most investors we met are convinced that this time it is different ... However, industries do not stay in a vacuum or steady state when faced with huge excess returns building and significant shortage heading into 2H13."
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Comments (5)
  • same123
    , contributor
    Comments (118) | Send Message
    wheres the qoute from sterne agee???


    Micron could report FY14 EPS of $2.70, says Sterne Agee
    Sterne Agee believes that Hynix's strong mobile/DRAM revenues bode well for Micron. The firm thinks that Micron could report FY14 EPS of about $2.70, versus the firm's previous estimate of $2.09. Sterne Agee reiterates a $17 price target and Buy rating on the stock. :theflyonthewall
    30 Jul 2013, 01:11 PM Reply Like
  • just saying 2
    , contributor
    Comments (11) | Send Message
    very short sighted analyst..... whatever capacity comes on can be consumed at the same margins for storage, to me that is almost unlimited upside. There is no where near enough flash capacity to even attempt to replace HDD but an interim step is hybrid HDD and if you think that won't add demand for flash then..... guess again
    30 Jul 2013, 01:15 PM Reply Like
  • Stock Market Mike
    , contributor
    Comments (2671) | Send Message
    I suspect MU's diversity compared to SNDK is going to be an asset going forward. Even if NAND prices go back to breakeven (We're a LONG way off from that), MU and Samsung can keep shifting DRAM around to keep prices high. For the first time in a long time, it looks like MU is set to deliver sustained profits.
    30 Jul 2013, 01:31 PM Reply Like
  • Randal James
    , contributor
    Comments (3871) | Send Message
    Re: Goldman call


    Not impressed

    30 Jul 2013, 01:41 PM Reply Like
  • kjjerome
    , contributor
    Comments (184) | Send Message
    I think they're trying to suppress Aug call options
    30 Jul 2013, 05:22 PM Reply Like
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