TLDR
- SanDisk (SNDK) stock fell about 6% Monday after S&P Global Ratings raised its credit rating to BBB from BB+.
- S&P expects fiscal 2027 revenue to grow 125% and EBITDA margins to reach 80%.
- Free cash flow is projected to top $23 billion, up from an earlier estimate of $15 billion.
- SanDisk repaid all funded debt and should keep a net cash position.
- Analysts see 48% upside to an average target of $2,205.59, and the stock is up about 527% this year.
SanDisk (SNDK) stock dropped about 6% on Monday, even though S&P Global Ratings raised its credit rating. The agency moved the NAND flash maker to BBB from BB+.
S&P kept a stable outlook on the company. It credited AI-driven memory demand and a balance sheet with no debt.
A down day on an upgrade is an odd mix. The details in the S&P note read well, though.
SanDiskās revenue rose 175% in fiscal 2026. Tight supply pushed flash memory prices higher across its business segments.
For fiscal 2027, S&P expects revenue to grow 125%. It also sees EBITDA margins reaching 80%.
Cash Flow and Balance Sheet
S&P now projects free cash flow above $23 billion in fiscal 2027. Its earlier estimate was more than $15 billion.
Higher memory prices should help. So should lower-cost technology and tighter control of operating expenses.
SanDisk plans to spend more on facilities and equipment. S&P still expects the cash flow to hold up.
The company repaid all of its funded debt earlier this year. S&P expects it to keep a net cash position even as it returns capital to investors.
Enterprise SSDs for AI data centers are a main driver. Cloud providers building out AI infrastructure need more storage for growing data volumes.
Supply Deals and Risks
Long-term supply deals with data center customers add visibility. They include purchase volume commitments and price protections.
S&P said that gives clearer earnings visibility than PC and mobile markets offer. Those markets are more exposed to swings in demand.
The agency did flag that memory is a cyclical business. Sudden price corrections can happen.
Competitors could add new supply by 2028. S&P said SanDiskās balance sheet has enough strength to handle that.
TipRanks lists a Strong Buy consensus on SanDisk, with 15 Buy ratings and two Hold ratings. The average price target is $2,205.59, which implies 48% upside.
The stock is up about 527% year to date, and Mondayās 6% drop followed that run.
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