By The Associated Press
NEW YORK (AP) — Shares of SanDisk Corp. gained Monday after a Thomas Weisel analyst forecast better revenue and margins next year as demand for memory chips improves.
Shares in SanDisk, which makes flash memory cards used in cameras and other gadgets, jumped 64 cents, or 4.4 percent, to $15.11 in afternoon trading.
In a note to investors, analyst Kevin Cassidy upgraded the stock to "overweight" from "market weight" and raised his price target to $20 from $15.
Cassidy said declines in SanDisk's manufacturing costs are accelerating as production returns to capacity levels. And deals to supply Toshiba Corp. and Samsung should help cut volatility in margins beginning in 2010.
Meanwhile, Cassidy said, demand for NAND flash memory should improve in the second of half of 2009 with the need for higher flash capacity supporting high-definition video, smartphones and solid-state drives.
Memory chip makers faced sharp price declines beginning last year as a glut of supply collided with a deepening recession. SanDisk fell to a loss in the second quarter of 2008 and has remained in the red since.
Cassidy said he expects a rebound in demand to drive revenue up 22 percent at SanDisk next year to $3.5 billion. That's up from a previous estimate of $3.2 billion, which was in line with the average estimate from analysts, according to Thomson Reuters.
That in turn should lead to a profit next year on an adjusted basis, Cassidy said, a year earlier than he expected.