SanDisk Rallies; Goldman Calls It Too Cheap To Ignore

SanDisk (SNDK) shares have received a boost today from Goldman Sachs chip analyst James Covello , who added the stock to the company’s Buy list with a $13 price target. He writes that the stock’s valuation “is now too attractive to ignore.” He notes that the stock has fallen out of favor after Samsung pulled its $26-a-share takeover bid, but that “SanDisk retains some of the key IP in the NAND industry, which we believe is worth significantly more than what is priced into the stock today.” He says that if the company successfully renegotiates a license agreement with Samsung, even with a 50% reduction in royalty rate, the stock would be worth close to $20, even if you assume zero value for its card business and give them zero credit for balance sheet cash. Covello says that even if no agreement with Samsung is reached, the company’s IP is worth $6-$7 a share, accounting for most of the current market cap. Concludes Covello: “investors with a ... (link)