Key Stats for SanDisk Stock
- Earnings Reaction: +6.85%
- Current Price: $649.97
- Valuation Model Target: $612.89
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What Happened?
SanDisk Corporation (SNDK) shares surged 6.85% following its fiscal second-quarter earnings release, pushing the stock toward recent highs to currently trade at $649.97.
The memory and storage giant delivered a blowout performance that obliterated Wall Street consensus estimates.
Revenue for the quarter reached $3.03 billion, safely beating the $2.69 billion expectation.
More impressively, Adjusted EPS came in at an incredible $6.20, crushing the $3.54 analyst estimate and representing a massive 408% sequential increase.
This massive financial outperformance is being driven by the rapid expansion of artificial intelligence infrastructure across global data centers.
Historically, the NAND flash market was highly cyclical and heavily dependent on consumer devices like smartphones and PCs.
However, data center demand is now taking over.
As AI models become more complex and require the processing of massive datasets, the need for high-performance enterprise solid-state drives has skyrocketed.
This insatiable demand allowed SanDisk’s data center revenue to surge 64% sequentially to $440 million.
Because demand is severely outpacing supply, SanDisk achieved an adjusted gross margin of 51.1%, up from just 29.9% in the prior quarter.
See analysts’ growth forecasts and price targets for SanDisk stock (It’s free!) >>>
Is SanDisk Undervalued Today?
The TIKR Model indicates that while the company’s fundamentals are improving rapidly, the stock’s historic run-up has fully priced in the near-term upside.
The stock has climbed from roughly $48 to $650 over the last year alone.
The model projects a target price of $612.89, representing a modest -5.7% downside from current levels.
However, management is executing a strategic pivot that could dramatically stabilize future cash flows and change how Wall Street values the stock long term.
During the earnings call, CEO David Goeckeler explained that the massive exabyte requirements of AI are forcing hyperscalers to rethink how they purchase memory.
Goeckeler stated verbatim: “As a result, we are engaged in discussions with customers to evolve from quarterly negotiations towards multiyear agreements with firmer commitments on supply and pricing, enabling better planning practices and more attractive returns.”
He also emphasized how this transition will permanently alter the economics of the industry.
Goeckeler added verbatim: “As a result, we believe NAND is becoming a more durable, structurally attractive industry with higher average returns.”
Read the full SanDisk Transcript on TIKR to see the revenue breakdown >>>
Valuation Deep Dive
The TIKR Advanced Valuation Model identifies SanDisk as a rapidly growing technology enabler currently trading at a premium following an explosive 1,200% rally over the past year.
- Target Price: $612.89
- Current Price: $649.97
- Annualized Return: -1.3%
The Joint Venture Extension: SanDisk secured its long-term manufacturing capabilities by extending its vital joint venture with Kioxia through December 2034. This 25-year partnership allows SanDisk to share the massive capital expenditures required to run world-class fabrication plants in Yokkaichi and Kitakami, Japan. This ensures a steady supply of next-generation BiCS8 memory chips for the next decade.
A Prudent Balance Sheet Reset: The company has aggressively utilized its recent cash windfall to repair its balance sheet. During the quarter, SanDisk generated $843 million in adjusted free cash flow and paid down $750 million in debt. The company exited the quarter with just $603 million in remaining debt and a pristine net cash position of $936 million.
Conclusion: A structural transformation fully recognized by the market. With a projected -5.7% total return potential, SanDisk’s current valuation fully reflects its incredible operational turnaround. The fundamental business has never been stronger, secured by an AI-driven data center boom, long-term pricing agreements, and a fortress balance sheet.
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How Much Upside Does SanDisk Stock Have From Here?
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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 stocks mentioned. Thank you for reading, and happy investing!
