Flash Benefits SanDisk

Another update has been issued today on SanDisk Corporation (SNDK), in which Zacks senior manufacturing sector analyst Steve Biggs, CFA maintains his Buy rating on the computer hardware manufacturer albeit with a lower target price.  Here we bring you some of the details:

'SanDisk had struggled earlier in the year with rapid price declines in the flash market. However, growing demand for high-capacity flash products and going into a seasonally strong period, we believe price declines will slow in the third and fourth quarters. SanDisk remains the best-positioned producer of flash given its investments in low-cost production capacity.

'Although Q2 price declines were still fairly severe on a historical basis, strong Q3 results give us confidence that the situation has bottomed out. Demand for high-capacity flash products should begin to drive demand in the second half, combined with seasonal strength, which should provide price support. SanDisk is well-positioned to benefit from its strategic investments in low-cost captive capacity Fab 3 and Fab 4 as demand grows.

'Following Q3 strength, we expect continued margin improvements combined with top-line growth. SNDK is currently trading at 36.3x our 2007 earnings estimate of $1.05 and 27.4x our 2008 EPS estimate of $1.39 per share. Our new target price of $60 represents a P/E multiple of approximately 43.2x our 2008 earnings estimate. Moreover, the company has undergone restructuring in the early part of the year. We, therefore, maintain as Buy the shares of SNDK and reduce our target price to $60 to reflect the expectations of a slowing economy in 2008.'

Attractive Price for JOYG

A Buy recommendation has recently been issued to mining machinery manufacturer Joy Global, Inc. (JOYG) by Zacks mining industry analyst Mario Ricchio.  Here's what his latest update had to say:

'Joy Global said it will record tax adjustments in its fourth quarter that will increase the quarter's book tax rate to approximately 51%. The adjustments include dividends received from foreign subsidiaries not previously forecasted, the write-off of pre-bankruptcy R&D credits and a reserve related to a contingent tax liability in South Africa.

'The company said the changes would impact full-year earnings by $0.16 per share. Since we consider the items non-recurring in nature, we have excluded them from our FY07 EPS forecast. Our FY08 EPS estimate remains unchanged at $3.15. Investors should continue to add shares of JOYG to their portfolio at the current price.

'Joy Global currently trades at a P/E of 19.2x our revised FY08 EPS estimate of $3.15. In our view, the company warrants a premium valuation to the industry mean multiple due to its larger share of recurring revenue as a percentage of total revenue.