TLDR
- Shares jumped 3.53% to $1,302.96 in Friday’s premarket session, rebounding from Thursday’s earnings-related decline
- Company delivered quarterly EPS of $39.25, surpassing analyst estimates by 13.9%; revenue reached $8.97B against $8.39B consensus
- Long-term supply agreements now account for 50% of planned fiscal 2027 output, according to CEO
- Company authorized additional $14B stock repurchase program, pushing total buyback capacity to $15.5B
- Wall Street maintains Buy consensus rating with mean price objective of $2,114.77
Shares of SanDisk (SNDK) advanced 3.53% to $1,302.96 during Friday’s premarket session, staging a recovery following Thursday’s decline that came on the heels of the company’s quarterly results.
The previous session’s pullback seemed counterintuitive given the strong numbers. The company delivered earnings per share of $39.25, crushing the Street’s $34.45 estimate by 13.9%. Revenues totaled $8.97 billion, significantly outpacing the $8.39 billion consensus and representing substantial growth from last year’s $1.9 billion.
What triggered the sell-off? Market participants focused on underwhelming forward revenue projections and raised questions about whether the company’s robust profit margins can persist amid evolving memory market dynamics.
Strategic Shift Toward Extended Contracts
In a conversation with Reuters, CEO David Goeckeler outlined the company’s evolving approach: Sandisk has pivoted from short-cycle transactions to extended purchase commitments. These arrangements now feature a median term of four years.
Currently, the company maintains eight such agreements spanning six customers, representing a combined value exceeding $93.9 billion. Management projects these contracts will account for 50% of fiscal 2027 manufacturing capacity and roughly two-thirds of fiscal 2028 production.
Since April, the company has executed five additional agreements, encompassing three partnerships with new clients and two expansions of pre-existing arrangements.
The company’s board simultaneously greenlit an additional $14 billion share repurchase authorization, elevating the aggregate remaining buyback capacity to $15.5 billion.
Analyst Community Weighs In
The analyst community largely maintained its positive outlook despite the volatile market response.
Evercore ISI reduced its price objective to $2,800 from $3,100 while preserving its Outperform designation. The firm highlighted that management’s projected gross margin range of 83% to 85% exceeded consensus expectations, and emphasized the strategic value of the new long-term supply agreements for revenue visibility.
Morgan Stanley maintained its Overweight stance with a $1,750 objective, citing resilient NAND demand fundamentals. Wedbush preserved its Outperform rating and $2,000 target, speculating that management may be adopting a conservative posture on forward guidance.
Jefferies lowered its target to $1,750 from $3,000. Goldman Sachs attributed part of the stock decline to elevated investor expectations heading into results, and cautioned that the tempered outlook might create headwinds for Micron (MU).
Taking a more measured stance, RBC Capital retained its Sector Perform designation while lifting its target to $1,300. Wells Fargo maintained Equal-Weight and reduced its objective to $1,400. Citigroup kept its Buy rating but lowered its target to $2,100.
The aggregate analyst consensus stands at Buy, with a mean price target of $2,114.77. The stock currently trades at approximately 17.1 times trailing earnings.
From a technical perspective, SNDK trades roughly 49% above its 200-day simple moving average, though it remains 9% below its 20-day SMA and approximately 24% under its 50-day SMA. A critical support zone exists near $1,277.50.
The MACD indicator continues trading above its signal line, suggesting diminishing downside momentum. Benzinga Edge assigns SNDK a Momentum Score of 99.87 while its Value Score registers at only 22.15.
Favorable broader market conditions provided support Friday morning, with Nasdaq futures climbing 0.48% and S&P 500 futures advancing 0.19%.
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