SanDisk: Citigroup Analyst Anticipates Strong Second Half

SanDisk Corp. (SNDK) shares were higher by $1.44, or 4.92%, to $30.71 on good volume of 9.1 million shares on Tuesday. The stock continued to the upside, breaking out over $30 in what now is not simply a countertrend move, but a clear reversal of the downward trend that has been in place since the fall of 2007. Heavy call option activity signals an extension of the rally into at least Friday. Schaeffer’s has the total call option volume at nearly four times the daily average, with particular interest in May calls with a $30 strike price – 10,104 contracts have traded compared to open interest of 15,041 contracts. What’s helped is that there is a clear fundamental backing to the move.

On Tuesday, Citi Investment Research analyst Craig Ellis noted that the flash memory supplier is moving into a seasonal “sweet spot” that may force him to raise earnings per share estimates. According to the Associated Press, the analyst points out among other things, that the company’s personal computer market offers an upside to earnings this year because of a slew of solid state disk products, and confirms that major memory chip makers shutting down production should help clamp down on the output during the second quarter, resulting in higher prices. Ellis says that “NAND’s comparative seasonal strength should augur well for SanDisk shares if fundamental and estimate trends emerge in the second and third quarters as we think possible.” I guess it’s a good time to be in SanDisk.

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Comments

[Mule]

Looks like another anal-yst driven short squeeze. SNDK has little control over its destiny being in a commodity business. Especially since it's asian competitors have no disipline to cut production. If it weren't for the royalty income, SNDK would be a $10 stock. Where is the killer app to drive sales??

Short target $20