Key Takeaways
- Sandisk shares fell 14% in the past week after fab partner Kioxia warned flash price gains are fading.
- Intel’s weaker margin guide showed the same squeeze from the buyer’s side.
- Sandisk’s own price gains slowed, but price-floor contracts cover about half this fiscal year’s output.
- Wedbush’s $2,000 target implies a below-average multiple and looks closer to the mark than the selloff.
Sandisk (SNDK) stock is down 14% in the week through Monday’s close, even after a record quarter. The trouble came from Kioxia (285A), its fab partner in Japan, which warned on Friday that the surge in flash prices is fading.
Intel (INTC), down 34% over the same week, added to it with a guide it partly pinned on memory costs. Wedbush kept its Outperform rating and $2,000 target anyway.
Another Record Quarter, and It Didn’t Matter
Fiscal first-quarter revenue rose 23% sequentially to $11.0 billion on an 85% gross margin. Sandisk guided the second quarter to $12.2 billion to $12.6 billion in revenue and $55 to $57 in pre-split adjusted EPS, and announced an 8-for-1 split.
Analysts now expect $228 of normalized EPS this fiscal year, up from $215 before the report:
To hit that number, Sandisk has to beat its second-quarter guide in each of the last two quarters, and that’s where a pricing stall would show first.
Kioxia put a number on the slowdown
Kioxia guided its December-quarter operating profit to ¥2 trillion, level with September’s and well short of the ¥2.35 trillion analysts expected. Its NAND prices rose in the mid-20s percent in the September quarter, after 70% the quarter before. Its shares fell 15.8% in Tokyo on Monday, the first session after the outlook.
Pricing drove about two-thirds of Sandisk’s prior-quarter 51% growth but only about 40% of this quarter’s 23%, and CFO Luis Visoso guided to only modest price increases.
Intel shows the buyer’s side: it expects its fourth-quarter adjusted gross margin to fall to 38%, from 44.1%, on a PC slump that memory shortages are speeding up.
TIKR tracks 25 analysts on Sandisk. How many say “Buy”?
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Priced for a bust
Sandisk traded at 4.4x forward earnings at Monday’s close, its lowest in a year and well under its 11x average:
That’s with long-term agreements, with price floors, locking in about half of fiscal 2027’s bits and two-thirds of fiscal 2028’s.
Wedbush’s $2,000, nearly twice Monday’s close, is about 8x forward earnings. The Street’s average is $2,029 (both pre-split). Not everyone agrees: Wells Fargo cut its target to $1,300 from $1,550 on Oct. 30, and Fox Advisors downgraded the stock to Equal-Weight on Monday, a day when nearly every chip stock fell.
At this price, Wedbush has the stronger case. Kioxia described prices leveling off, not falling, and the contracts put a floor under much of Sandisk’s volume.
If flat prices turn into falling ones, the 85% margin goes first. The second-quarter report, expected in late January, will show whether that’s starting.
So what is Sandisk stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
