TLDR
- SanDisk (SNDK) stock fell about 6% on Monday after S&P Global Ratings upgraded it to BBB from BB+.
- S&P expects fiscal 2027 revenue to grow 125% and free cash flow to top $23 billion.
- The company repaid all its funded debt and is expected to keep a net cash position.
- Long-term data center supply deals include volume commitments and price protections.
- The average price target of $2,205.59 implies 48.3% upside, and the stock is up 526.6% this year.
SanDisk (SNDK) stock fell about 6% on Monday, even after S&P Global Ratings gave it a credit upgrade. The agency lifted its rating to BBB from BB+.
S&P kept a stable outlook on the NAND flash maker. It pointed to strong cash generation and a balance sheet with no debt.
That is not the reaction bulls were hoping for on an upgrade day. S&P’s note, though, was full of positives.
What S&P Expects for Fiscal 2027
S&P expects revenue to grow 125% in fiscal 2027. It also sees EBITDA margins reaching 80%.
Free cash flow is projected to top $23 billion. That is up from S&P’s earlier estimate of more than $15 billion.
Higher memory prices are expected to help. So are cost savings from newer technology and tighter control of operating expenses.
SanDisk plans to spend more on facilities and equipment. S&P still expects strong cash flow despite that.
Fiscal 2026 was already a big year. Revenue rose 175% as limited supply pushed flash memory prices higher.
Balance Sheet and Risks
SanDisk repaid all of its funded debt earlier this year. S&P expects it to hold a net cash position even with higher spending and money returned to investors.
Long-term supply deals with data center customers are improving visibility. These agreements include purchase volume commitments and price protections.
S&P said those deals give clearer earnings visibility than the traditional PC and mobile markets. Demand for enterprise SSDs used in AI data centers is a key driver.
S&P did flag that memory markets are cyclical. Sudden price corrections remain possible.
New supply from competitors could arrive by 2028. S&P said SanDisk’s balance sheet has ample strength to handle that.
On TipRanks, SanDisk holds a Strong Buy consensus, with 15 Buy ratings and two Hold ratings. The stock has climbed 526.6% so far this year, and the average price target of $2,205.59 implies 48.3% upside.
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