Key Takeaways
- Shares of SanDisk declined 9.44% Tuesday even as Bank of America upgraded its price target
- BofA increased its SNDK price objective from $2,100 to $2,500 while reaffirming its Buy recommendation
- Wamsi Mohan, BofA analyst, projects average selling prices could surge up to 35% with bit growth increasing 13% sequentially
- Year-to-date, SNDK has soared 800% and climbed 4,755% over the trailing twelve months, reaching a $323 billion market capitalization
- Potential concerns include a forward P/E ratio of 33 — exceeding both Nvidia and Micron — alongside bearish chart patterns
SanDisk shares experienced a significant decline Tuesday, shedding 9.44% during the trading session. The selloff occurred despite Bank of America Securities lifting its price target on the memory storage company from $2,100 to $2,500.
BofA’s Wamsi Mohan maintained his Buy recommendation on the stock. The rationale behind his upgraded target centers on the persistent supply-demand mismatch in the NAND market, which Mohan anticipates will continue through 2027.
Mohan projects that SanDisk’s average selling prices could increase by as much as 35%. Additionally, he anticipates bit growth — representing total memory volume shipped — will expand 13% on a sequential basis.
With these assumptions in mind, BofA now estimates SanDisk will deliver $9.1 billion in revenue for the June quarter alongside earnings per share of $37.01. These figures exceed the Street’s current expectations of $8.35 billion in sales and $34.26 per share in earnings.
For the subsequent quarter, BofA is modeling revenue of $11.5 billion with EPS reaching $48.55.
Multi-Year NAND Contracts Strengthen Revenue Predictability
A central element of Mohan’s optimistic outlook involves SanDisk’s transition toward long-term NAND supply agreements, referred to as NBMs. These arrangements secure multi-year revenue streams and provide greater earnings predictability for the investment community.
BofA anticipates widespread adoption of these contracts among cloud infrastructure and enterprise clients. The firm also highlighted that these agreements are designed to maintain gross margins within SanDisk’s strategic target corridor.
This strategic pivot has contributed to SanDisk’s extraordinary market performance. The stock has rallied 800% since the beginning of the year and surged 4,755% over the past year. This transformation has elevated the Western Digital spinoff into a company valued at $323 billion.
The bullish sentiment extends beyond BofA. Mizuho Securities lifted its target from $1,825 to $2,200. Cantor Fitzgerald moved its objective to $2,900. Susquehanna Financial Group holds the Street’s highest target at $3,250.
The consensus rating on Wall Street stands at Strong Buy — comprising 14 Buy ratings, two Hold ratings, and zero Sell ratings in the last three months. The average analyst price target of $1,979.38 suggests approximately 3% downside from current price levels.
Growing Concerns Emerge
Despite widespread analyst optimism, several risk factors are emerging — and Tuesday’s sharp drop underscores those vulnerabilities.
SanDisk’s forward price-to-earnings multiple has expanded to 33, surpassing Nvidia at 22 and Micron Technology at 18. This valuation premium is beginning to attract scrutiny from market participants.
Supply dynamics present another challenge. Elevated memory pricing could incentivize rivals such as Micron, Kingston Technology, and Kioxia to increase production capacity, potentially triggering price compression.
From a technical perspective, the weekly chart displays a bearish RSI divergence pattern. The Relative Strength Index has trended lower even as the stock price advanced — a configuration frequently associated with impending corrections.
Additionally, SNDK is currently trading at $2,238, significantly above its 50-day moving average of $1,458.
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