With all the consumer electronics that are being bought and sold around the world, flash memory should be doing very well. SanDisk Corp. (NASDAQ: SNDK) is the independent leader of flash memory. So why can this company just not at all get its earnings and guidance right?
Source: SanDisk Corp.
SanDisk announced, yet again, a revision to its guidance for the first quarter to approximately $1.30 billion, depending on final sell-through results. The company had previously guided its revenues into range of $1.40 billion to $1.45 billion. Thomson Reuters has a consensus estimate for first-quarter revenue of $1.44 billion.
What is amazing is that so many analysts have defended SanDisk. The consensus is such that investors just cannot accept the notion that SanDisk is faltering again. Now those investors are having to face 52-week lows.
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In its press release, SanDisk noted that other forecasts for the quarter and the year are being withdrawn. However, there will be an update in the first-quarter earnings report in mid-April. SanDisk also will reschedule its previously announced May 2015 Investor Day to a later date.
This revision of first-quarter revenue estimates is primarily due to certain product qualification delays, lower-than-expected sales of enterprise products and lower pricing in some areas of the business. That sure sounds like SanDisk is getting crushed from all angles.
SanDisk is a supplier of quality, state-of-the-art solutions that are at the heart of many of the world’s largest data centers and embedded in advanced smart phones, tablets and PCs.
While some have speculated that the business loss to Samsung is the reason for 2015 revenue revisions, many top Wall Street analysts think that the soft fourth-quarter earnings reports could be a one-off correction. We have even seen one analyst say that this drop is giving investors an excellent entry point for this top stock. In a competing analyst call, the firm BTIG reportedly has downgraded SanDisk to Neutral from Buy.
Sanjay Mehrotra, president and CEO of SanDisk, said:
We are disappointed with our financial outlook. We will work through these headwinds, leveraging our compelling product roadmap and broadening customer base. We believe our growth prospects remain strong and we are encouraged by the progress we are making in our 3D NAND technology.
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Again, investors will have to strongly consider what to do here, now that this stock has broken through support and hit a 52-week low. Shares of SanDisk were down about 17% at $67.33 shortly after Thursday’s opening bell. The prior 52-week trading range was $73.11 to $108.77.
SanDisk’s stock has a consensus analyst price target of $91.94. Maybe that should read “had” because analysts are going to be dropping their targets.
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