Sandisk shares rally after Goldman ups price target

Sandisk Corp. (Nasdaq: SNDK) shares moved up 4 9/16, or 7 percent, to 73 1/2 Tuesday after Goldman Sachs raised its 12-month price target from $60 to $80 a share.

Last month, the maker of flash memory products met analysts' estimates in its third quarter, earning $6.5 million, or 21 cents a share, on sales of $67.5 million.

Its shares moved up to a 52-week high of 95 3/4 in August after falling to a low of 10 1/8 last November.

First Call consensus expects it to earn 22 cents a share in its fourth quarter and 77 cents a share in the fiscal year.

In the third quarter, gross product margins fell from 27 percent to 24 percent because of lower-than-expected manufacturing yields initially for 128 megabit products, and a 19 percent drop in average selling prices per megabyte.

Sandisk officials expect product gross margins to improve "slightly" once 256 megabit devices begin shipping.

The recent Taiwanese earthquake didn't affect third quarter results. But the quake is expected to create spot shortages and higher expediting costs in the fourth quarter. Sequential revenue growth will be lower in the fourth quarter, although margins are expected to improve in the first quarter of next year as higher prices go into effect for new orders.

All five analysts following the stock maintain either a "buy" or "strong buy" recommendation.