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On Mar 24, 2014, we issued an updated research report on SanDisk Corp. (SNDK - Analyst Report) post better-than-expected fourth-quarter results.

Revenues from commercial and retail channels were strong, aided by higher mobile embedded and solid state drive (SSD) sales. Moreover, the acquisition of SMART Storage Systems is expected to expand SanDisk’s offering in the Enterprise SSD segment.

SanDisk has been making considerable efforts to push its client and enterprise-class SSD products and expects the SSD’s to account for around 25% of total revenue in 2014.

Per technology research firm Gartner, the SSD market is poised for considerable growth, with revenues projected to more than double to reach $19.4 billion in 2014, up from $9.2 billion in 2012. Thus, SanDisk is expected ideally to capture 10.0–12.0% revenue share by 2014, up from 3.0–4.0% share at the end of 2012

Moreover, given the increasing inclination of both individual and corporate customers toward going mobile with tablets and smartphones, the partnership between SanDisk and other original equipment manufacturers to provide customized data storage solutions seems to bode well. It is worth mentioning that Apple (AAPL - Analyst Report) is currently a major customer for SanDisk.

Additionally, the company’s regular share buybacks and dividend payments boost earnings per share and increase shareholders’ loyalty.

Nonetheless, lower average selling price per gigabyte could hamper SanDisk’s top line.  Moreover, lackluster PC sales, European issues, competition from its peers, such as Fusion-io and Micron (MU - Analyst Report), and currency fluctuations could hurt fundamentals to some extent.

Additionally, customer concentration remains a headwind for SanDisk. Revenues from its top 10 customers and licensees accounted for approximately 49% of total revenue in fiscal 2013 compared to 43.0% in fiscal 2012, which is quite significant. Loss of any customer or major licensee may reduce orders, thereby impacting revenues and operating results.

Currently, SanDisk has a Zacks Rank #3 (Hold).

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