Sandisk (SNDK) is well-positioned in an early-stage recovery of the Not AND, or NAND flash memory cycle, BofA Securities said in a report Wednesday.

The investment bank initiated the coverage of Sandisk with a buy rating and a price target of $61, the report said, adding that the positive outlook is driven by favorable near-term pricing and the company's distinct joint venture structure with Kioxia.

The analysis points to a favorable near-term NAND outlook due to recent supply curtailment in the first quarter, leading to an "increasingly positive" pricing environment.

While acknowledging the fragmented nature of the industry, analysts believe a "longer-term outlook [is] favorable with some potential for consolidation." SanDisk aims for "more disciplined pricing" in the capital-intensive industry, the report said.

However, the investment bank also noted risks, including the NAND Flash industry's sensitivity to recessions, aggressive expansion by Chinese firm YTMC, potential supply-demand imbalances from industry fragmentation, and the high capital expenditure requirements inherent in the sector.

Shares of Sandisk were up more than 4% in recent Wednesday trading.

Price: 46.01, Change: +1.92, Percent Change: +4.35