Why SanDisk Stock Is Hovering Near the Top of Its 52-Week Range



How has fiscal 1Q16 been for SanDisk?

So far, we saw that SanDisk (SNDK) reported better-than-expected earnings in fiscal 1Q16 due to strong demand from client and enterprise SSDs (solid state drives). This is probably the last earnings reported by SanDisk as a separate entity. The company is expected to complete its merger with Western Digital (WDC) in fiscal 2Q16. The merger got into trouble in February 2016 when the merger was opposed by a key investor of WDC, Alken Asset Management.

Let’s see how SanDisk investors have reacted to the merger.

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SanDisk stock price movement

After the announcement of its fiscal 1Q16 earnings, SanDisk stock rose by 0.8% to $76.50 on April 28, 2016. However, the very next day, the stock fell 1.8% to $75.13 after Western Digital announced declining fiscal 3Q16 earnings that missed analysts’ estimates. WDC shares fell 11.4% that day.

Comparing to past performance, SanDisk shares rose 37.7% in October 2015 when the merger with WDC was announced. Since then, the stock has been rising. However, in January 2016, the stock fell almost 19% due to a slowdown in the semiconductor industry. Many key companies reported a decline that month. Intel (INTC) fell 12.5%, and Micron Technology (MU) fell 22%. The S&P 500 Index fell 5.1% that month.

SanDisk stock picked up from January 25, 2016, onward. To date, it has risen 21.7% and is currently hovering above $75. That’s at the higher end of its 52-week range of $44.28–$78.83.

About SanDisk stock

SanDisk has a market capitalization of $15.2 billion, of which 3.3% is held by 61 ETFs. The VanEck Vectors Semiconductor ETF (SMH) has exposure to 26 semiconductor stocks, including 13.2% in INTC, 3.4% in SNDK, and 3.3% in MU.

SanDisk has a PE (price-to-earnings) ratio of 41.27, which is higher than WDC’s PE ratio of 8.36. The industry PE ratio stands at 23.19.


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