Goldman Sachs stated that one should not be blinded by prior concerns—SanDisk not only cleared the market's high bar but utterly crushed all expectations.
On January 30, according to information from the Zhui Feng trading desk, Goldman Sachs said in its latest research report that despite SanDisk's stock having already experienced a significant rally recently, driven by Nvidia's memory controller announcement, tight industry supply and demand, and strong pricing expectations—which set an extremely high bar for this earnings report—the company's delivered results were still astonishing.
Goldman Sachs believes that the data, both for the just-concluded fourth quarter and the guidance for the upcoming quarter, is not merely "better than expected" but far exceeds (Far Above) Wall Street consensus.
Goldman Sachs analysts stated that SanDisk's Q4 revenue reached $3.03 billion, exceeding both Goldman Sachs' and the market's consensus expectations; even more remarkable was the gross margin reaching 51.1%, far surpassing Goldman Sachs' expectation of 43.0% and the market's expectation of 42.3%.
The report stated that although Goldman Sachs maintains its $320 price target and Buy rating, the current stock price is near $540, approximately 40% above the target price, indicating the market's pricing of the tight supply and demand situation in the NAND memory industry is already very aggressive.
Goldman Sachs said, however, that the company's Q1 guidance is even more startling—projected revenue midpoint is $4.6 billion, 53.3% above market expectations, gross margin guidance is 66.0%, and the EPS guidance midpoint is $13.00, almost 2.4 times the market's expectation.
Goldman Sachs believes these figures indicate the NAND memory industry may be experiencing a stronger-than-expected boom cycle, which could have positive ripple effects for peer companies like Micron Technology.
Q4 Actuals: Not Just a Beat, But a Crushing Blow The report stated that the market had expected SanDisk to deliver decent results, but the actual figures showed that Wall Street's analytical models had completely underestimated the company's profitability.
Revenue: SanDisk reported revenue of $3.03 billion. In comparison, Goldman Sachs had previously forecast $2.70 billion, while Wall Street (Visible Alpha consensus) predicted only $2.69 billion.
Gross Margin: This was one of the most surprising parts. The actual gross margin soared to 51.1%, far outstripping Goldman Sachs' forecast of 43.0% and Wall Street's expectation of 42.3%.
Non-GAAP EPS: The final figure was $6.20. This number didn't just beat expectations; it practically mocked them—Goldman Sachs had forecast $3.66, and Wall Street expected $3.55. The actual result was almost double market expectations.
Q1 Guidance: Disruptive Growth Expectations Goldman Sachs stated that if the Q4 results are "history," then the company's Q1 guidance directly ignited investor sentiment. Management's outlook shows that the tightness of NAND supply and pricing power are translating into massive profits.
Revenue Guidance: The company projects Q1 revenue midpoint of $4.60 billion. Goldman Sachs had previously forecast only $2.62 billion, while Wall Street expected $3.00 billion; the guidance is over 50% above the market consensus.
Gross Margin Guidance: Expected to climb further to 66.0%. Goldman Sachs had forecast 44.0%, and Wall Street expected 47.2%. This signals exceptionally strong pricing power.
EPS Guidance: The company provided a range of $12.00 to $14.00, with a midpoint of $13.00.
Goldman Sachs had previously forecast only $3.48, and Wall Street expected $5.42. The guidance midpoint is 140% above the Wall Street expectation and 273% above Goldman Sachs' own forecast.
Goldman Sachs analysts pointed out that the significant uplift in investor expectations stems mainly from the recent stock surge, tight industry supply and demand, and Nvidia's actions in the memory sector. The firm explicitly stated it expects Micron Technology to see a positive reaction due to similar end-market exposure.
As a major supplier of NAND and DRAM memory chips, Micron Technology faces a similar industry supply and demand environment. SanDisk's outperformance may signal that the entire memory chip industry is in the midst of a powerful upcycle.
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