Thinking Of SanDisk Corporation (SNDK) As An Activist Target by Activist Stocks

Last week, Sanford Bernstein called SanDisk an activist target. This comes after the stock is down nearly 40% over the last quarter. The key is that the company is facing pricing pressures and struggling with sales of enterprise products. SanDisk is a leader in NAND flash memory and it has Toshiba as one of its major partners. Ultimately, it’s one of the only vertically integrated players in the memory space.

Bernstein’s biggest focus is that SanDisk is trading at a deep discount to what it considers fair value. Bernstein has a $100 a share replacement value on the company, citing the cash balance, IP portfolio and undervaluing as reasons that it’s an activist target.

Or, theres’ the buyout potential for SanDisk, with Western Digital being the rumored name. And there’s also Seagate, Micron and SK Hynix that could step up.

Here’s the key issue though — the entire memory space is relatively cheap, so the fact that SanDisk is “cheap” isn’t a viable reason for an activist to get involved. Now, that’s not to say further industry consolidation won’t happen, it will, in part because it has to.

Western Digital appears to hold a lot of the power right now, so they make sense as the primarily target for an activist. Being a hard drive player, they’d also attract less scrutiny by buying up a memory flash player. Western Digital is the likely activist target and SanDisk or Micron will be the M&A bait.

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