TLDR
- Argus Research upgraded Sandisk to Buy from Hold with a 12-month price target of $1,600
- SNDK stock is down 47% from its June 25 record high of $2,335, currently trading around $1,239
- Sandisk fell 6.8% on Thursday after its earnings outlook disappointed, then dropped another 3.7% Friday
- Analyst Jim Kelleher, ranked top 1% on Wall Street, calls the pullback a “compelling price point”
- Despite the recent drop, SNDK is still up 422% year-to-date and 2,757% over the past 12 months
Argus Research analyst Jim Kelleher upgraded Sandisk to Buy from Hold on Friday, setting a 12-month price target of $1,600. The stock rose 2.2% to $1,239.13 on Monday following the call.
Kelleher started coverage in July at Hold, saying his team was waiting for a better entry point. At that time, the stock was trading around $1,757.
That entry point has arrived, according to Kelleher. “We believe that point has arrived, with the shares at close to half of their peak level,” he wrote.
Sandisk hit a record high of $2,335 on June 25. Since then, it has dropped 47%, falling well below its 50-day moving average near $1,679.80.
The sell-off accelerated last week after earnings. Sandisk fell 6.8% on Thursday after its forward outlook disappointed investors, despite posting strong quarterly results. The stock dropped another 3.7% on Friday.
Fiscal fourth-quarter revenue climbed more than 370% year-over-year to $8.97 billion. Adjusted EPS came in at $39.25.
What’s Driving the Bull Case
The upgrade is not just about a cheaper price. Kelleher believes Sandisk is “in the early stages of a multiyear period of revenue acceleration and margin expansion.”
Demand for NAND-based storage used in AI data centers has been outpacing supply. That tight supply environment has given memory producers more pricing power.
Sandisk has been moving deeper into enterprise, cloud, and hyperscale data center markets. Higher NAND prices and rising shipment volumes are both contributing to revenue growth, meaning pricing alone is not driving the gains.
Major cloud operators including Amazon, Meta Platforms, and Alphabet are spending hundreds of billions of dollars building out data center infrastructure. That spending is a direct tailwind for Sandisk’s business.
“Given that revenue is growing much faster than costs, we are modeling additional margin expansion going forward,” Kelleher wrote.
The $1,600 price target implies roughly 32% upside from current levels over the next 12 months.
What Wall Street Thinks
Kelleher is not alone in his bullish view. Of the 16 analysts covering the stock, 14 rate it a Buy and 2 rate it a Hold. That gives SNDK a Strong Buy consensus rating on Wall Street.
The average price target across all analysts stands at $2,181.25, which implies around 80% upside from where the stock is trading now.
Even with the steep pullback, Sandisk’s year-to-date gain stands at 422%. Over the past 12 months, the stock is up 2,757%.
The most recent data point: SNDK was trading at $1,239.13 as of Monday’s session, up 3.05% on the day.
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