Auriga is maintaining its Sell rating and $35 PT on SanDisk Corporation (NASDAQ: SNDK).

“Management presented helpful details on cost reductions and operations, and recapped a strong 2010, which admittedly saw much better cash generation than we thought the model could produce,” Auriga writes. “Near-term, the crux of the argument is around earnings power and the stability of the NAND industry – contrary to many investors, we remain unconvinced that NAND demand will outstrip supply in 2011, and we expect additional capacity to pressure industry profitability over the next few years.

“Longer-term, investors do not seem focused on the potential for viable NAND replacements to emerge, which at the very least poses a threat to SNDK's royalty revenue stream.”

SanDisk Corporation closed Thursday at $49.02.