Key Takeaways
- DRAM Scare, NAND Stock: Sandisk fell 17.86% last week to $1,299.30, with Monday, Wednesday, and Friday doing ~95% of the damage after China’s CXMT flagged denser server DRAM.
- Single-Digit Multiple: Shares trade at 6.05x NTM normalized earnings, about half their one-year mean of 11.68x.
- Street Holds Firm: 17 buys, 4 outperforms, 3 holds, and 1 underperform, with a $2,173 mean target ~67% above Friday’s close.
Sandisk (SNDK) stock fell 18% last week, from $1,582 at the October 9 close to $1,299 on Friday, October 16, after China’s CXMT said it would launch denser server memory by year-end. The selling kept going as rate-hike worries hit AI stocks.
The odd part is that CXMT makes DRAM, the working memory inside servers, while Sandisk makes NAND flash, the storage that holds data. The threat was aimed at a different product, yet on Monday Sandisk fell harder than Micron, the US company CXMT actually competes with.
Three Sessions, Two Reasons
Monday, Wednesday, and Friday account for about 95% of the $283 drop.
- Monday, October 12 (down 6%): This was the first US session after CXMT President Cao Kanyu told a Shanghai chip conference that the company would release server DDR5 memory built on a 4F² cell design by the end of 2026. The design can cut cell area by about 33% versus today’s standard. Micron (MU) fell nearly 4% that day, and Samsung and SK Hynix each dropped more than 7% in their next Seoul session.
- Wednesday, October 14 (down 5%): Hot inflation data lifted bets on another Fed rate hike. AI hardware stocks sold off, with the CXMT worries still in the background.
- Friday, October 16 (down 7%): Memory stocks kept falling even after Goldman Sachs told clients the CXMT fears were overdone. Goldman also called Sandisk’s flash storage less exposed to CXMT than the AI memory makers.
Tuesday and Thursday each took off less than 1%. Even Western Digital (WDC), which makes hard drives, slid about 5% on October 15. Investors sold the whole memory and storage group, not just the companies CXMT competes with.
Sandisk’s Guidance Hasn’t Changed
Nothing Sandisk said last week changed its outlook. In August, it guided fiscal first-quarter revenue to $10.30 billion to $10.80 billion, with non-GAAP EPS of $44 to $46 and non-GAAP gross margin of 83% to 85%. Datacenter revenue reached $2.98 billion in fiscal Q4, about a third of the total.
Annualize the midpoint of that EPS guide, and Friday’s price works out to roughly 7x that annualized non-GAAP EPS.
Sandisk Stock Trades at Half Its Usual Multiple
On analysts’ forward estimates, the multiple is even lower. Sandisk trades at 6.05x its next-12-month normalized earnings, against a one-year mean of 11.68x and a low of 5.57x set in August.
That’s 48% below the average multiple. Memory companies earning margins this high usually trade at low multiples, because investors expect prices to fall back eventually. Even so, last week pushed the multiple most of the way back to its August low without any change in Sandisk’s guidance.
The Street’s Mean Target Rose as Sandisk Stock Fell
The mean target is $2,173, 67% above Friday’s close. Sandisk has 17 buys, 4 outperforms, 3 holds, and 1 underperform. Twenty-four analysts have set a price target, ranging from $1,000 to $3,600.
At the end of September, the stock closed at $1,740 and the mean target sat at $2,137. Since then, shares have fallen 25% while the mean target edged up 2%, and the one sell rating from September no longer appears.
That leaves the widest gap between target and price in any snapshot over the past year. In July, the mean target sat just 11% above the price. Even the lowest target, $1,000, is only 23% below Friday’s close.
What Settles It for Sandisk on October 29
Sandisk reports fiscal first-quarter results on October 29. The number to watch is gross margin against the 83% to 85% guide, along with whatever the company says about NAND pricing into the December quarter.
If non-GAAP gross margin lands inside that range and the next guide holds up, that would support my view that the selloff overstated Sandisk’s near-term earnings risk and that a 6x multiple looks too low. If margins slip below 83%, the selloff will have an earnings case behind it, just not the one CXMT supplied.
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!
