SanDisk: Stifel Sees Upside, Auriga Reiterates “Sell”

Strength in the NAND flash memory chip market, and from Apple’s (AAPL) iPhone in particular, should help SanDisk (SNDK) beat expectations when it reports Q2 earnings when it reports tomorrow, according to a note today from Stifel Nicolaus analyst Patrick Ho.

Ho doesn’t formally cover SanDisk: he’s more interested in the implications for some of his coverage companies, including Teradyne (TER) and Verigy (VRGY), both of which he rates “Buy.” Those two companies make chip test equipment.

“We believe the company (and the overall NAND flash market) has seen a pickup in handset demand, as well as continued strength in many Apple-based products (including the iPhone 3G S),” writes Ho. Ho is watching tomorrow’s announcement to see what SanDisk says about chip-equipment capital expenditures.

In a separate note today, Auriga Securities analyst Daniel Berenbaum reiterated his “Sell” rating on SanDisk, writing that the company is too “consumer focused,” and his “checks” indicate that price increases on retail flash memory drives are starting to fade. WIth seasonally normal unit volume expected in flash drives for the second half of this year, Berenbaum thinks SanDisk may only make the middle of its forecast revenue range of $650 million to $725 million, which would be less than the consensus estimate of $708.6 million.

SanDisk shares today are down 50 cents, or 2.7%, at $18.12.