UPDATE: Nomura Downgrades SanDisk on Unfavorable Risk-Reward

In a report published Thursday, Nomura analyst Sidney Ho downgraded the rating on SanDisk Corporation (NASDAQ: SNDK) from Neutral to Reduce, and lowered the price target from $66.00 to $56.00.

In the report, Nomura noted, “We are lowering our rating on SanDisk from Neutral to Reduce, as we believe risk-reward heading into 2014 is not favorable. Rising industry supply and capital intensity, along with a less competitive cost structure, pose risks to consensus estimates in 2H14. SanDisk's shares have significantly outperformed year to date (+59%) versus SOX (+35%), benefiting from limited industry supply growth in the past two years. However, the setup for 2014 looks much less favorable. Meanwhile, demand has been soft in the low-end market, and industry growth hinges heavily on solid state drives. We also think any cost advantage that SanDisk may have is shrinking. Samsung's 3D NAND has the potential to be very disruptive in 2H14.”

SanDisk Corporation closed on Wednesday at $67.37.