Flash memory chip maker SanDisk (SNDK) should see higher product gross margin as a result of increasing tightness in the supply of flash memory production, opines Bear Stearns analyst Gurinder Kalra.
With flash memory supply getting tighter the rest of this year, Kalra expects SanDisk will focus on selling some of its more expensive flash memory cards–the kind used in cell phones and digital cameras–which will boost the company’s gross product margin as a percentage of sales in the next couple of quarters from 22% to 24%.
Which, in turn, causes Kalra to raise his earnings estimates for SanDisk for the third quarter from 28 cents to 33 cents a share and for the fourth quarter from 60 cents to 70 cents. Both estimates are above the Street’s average estimate, he notes.
Kalra has a $68 price target for SanDisk.
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