SanDisk shares jump on optimistic outlook
(Reuters) - SanDisk Corp (SNDK.O) shares rose 15 percent after the memory chip maker surprised the market with second-quarter results above estimates and an upbeat outlook as improving memory chip prices shore up margins.
SanDisk said on Thursday it expected revenue between $1.15 billion and $1.25 billion for the third quarter, and expects gross margins to stabilize in the 26 to 30 percent range before growing in the fourth quarter.
"The third quarter guide was modestly below consensus, but likely better than feared and should stop the bleeding for investors that have seen shares fall 29 percent this year," Raymond James analyst Hans Mosesmann said in a note.
SanDisk shares rose to $40.39 in early trade in their biggest gain in three years. They were trading up 14 percent at $40.14 on the Nasdaq on Friday.
SanDisk's results come amid a gloomy chip spending environment, where bellwethers like Intel Corp (INTC.O) and Advanced Micro Devices Inc (AMD.N) along with smaller rivals like Freescale Semiconductor Ltd (FSL.N), have all raised outlook warnings.
Better NAND pricing environment and increasing contributions from higher-margin solid state drives will offset the impact from an increase of lower-margin memory chips sold to handset manufacturers, Wedbush analyst Betsy Van Hees wrote in a note. She raised her price target on the stock to $31 from $29.
(Reporting by Himank Sharma in Bangalore; Editing by Joyjeet Das)
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