J.P. Morgan starts SanDisk coverage with 'neutral' rating

Shares of data-storage device maker SanDisk SNDK.O rise 1.9% to $232.85 premarket

J.P. Morgan initiates coverage with "neutral" rating and $235 PT, implying a 2.8% upside to stock's last close. Shares have more than doubled this year

SNDK's data center revenue is set to triple in FY25, helped by hyperscaler deals and supply diversification, while industry spending discipline and rivals' focus on HBM (High Bandwidth Memory) keep SSD (solid-state drive) pricing firm - brokerage says

"As a pure play NAND (flash memory) supplier, co can leverage joint venture efficiencies, expanding gross margins and free cash flow without matching peers’ capex burdens," adds J.P. Morgan

Brokerage says SNDK's current pricing strength is likely temporary and expects future capacity growth and slowing demand to limit long-term upside

13 of 18 brokerages rate the stock "buy" or higher, 5 "hold"; median PT is $266.5 - data compiled by LSEG