Summit: Buy SanDisk, 'The Time Has Come'

In a report published Monday, Summit analyst Srini Sundararajan upgraded the rating on SanDisk Corporation (NASDAQ: SNDK) to Buy, with an $85 price target. The analyst believes that it is time to buy the stock, given that all the factors that were adversely impacting it are now in the past.

"There are still some worries that still need to be addressed, but, if you wait for a full cure, the time for a profit would be long gone," Sundararajan stated.

The company's embedded and enterprise sales had been suffering due to product issues and regulatory delays. However, SanDisk has regained its contract with Apple Inc. (NASDAQ: AAPL) for Macbook and Apple Watch. Also, NAND prices have been comparatively stable since end-April.

Another problem that had been plaguing the company was of a decline in opportunities in 2015 in the enterprise market, given the rapid market shifts. However, according to the note, the market shift "involved the cheaper SATA which surprisingly did better than faster PCIe this year, however, this will be reversed in 2016 due to broadening deployment of NVMe infrastructure using cheaper captive NAND (1Ynm technology)."

In addition, with prices turning more stable since April, the company is likely to either restock inventory in future quarters or experience seasonally strong quarters. The stability in the USD/Yen has also helped.

To deal with supply challenges, most semicap companies, including SanDisk, have been committed to raising capacity. At the same time, the company also intends to undertake share buybacks worth another $2.2 billion, which is equivalent to 16.2 percent of its current market cap. SanDisk also intends to undertake additional buybacks worth $750 million in 2015.