Analysts weighed in positively on the company's new financial targets - helping to further a rally that's brought shares up more than 60% from their recent low point
Sandisk impressed analysts with its new financial targets.
Sandisk's stock was furthering a sharp rally off recent lows - such that it's now up more than 60% in just over two weeks.
The company's shares $(SNDK)$ were up 6.5% in midday action Friday, after rising 13.7% in Thursday's session. The surge reflects Wall Street's optimism about Sandisk's latest financial targets and technology road map.
The memory and storage maker said at its investor day Thursday that it expects revenue to grow at a mid- to high-teens rate between fiscal years 2028 and 2030. Sandisk is also aiming to sustain a high gross margin of around 80% in this period. The company said its "new business model" agreements, which offer improved visibility into customer demand, are spurring confidence in these targets.
Sandisk also plans to keep operating margins at about 75% in this time frame - though Morgan Stanley analyst Joseph Moore said he doesn't see that level being sustainable, given that is the result of a current memory-chip shortage.
However, Moore wrote in a note to clients that Sandisk "can stay at or above these margin levels for multiple years," as supply is expected to grow 20% to meet data-center demand, and other parts of the memory and storage industry are experiencing supply shortages.
J.P. Morgan analyst Harlan Sur said Sandisk's NBM agreements are one reason he sees the company "uniquely positioned to capture the ongoing structural inflection in NAND demand."
The long-term agreements have both "structurally reset [Sandisk's] margin profile higher and materially reduced cyclicality," he said in a note to clients, referring to the historical ups and downs of the memory industry.
Meanwhile, the NAND flash-storage maker touted its upcoming high-bandwidth flash technology, which it said can complement high-bandwidth memory and potentially be used instead of it.
The offering could become "a huge new growth driver for NAND demand," Bernstein analyst Mark Newman said - but it could also "significantly eat up wafer supply and lead to shortages continuing far longer than even the bulls expect."
That's because Newman estimates high-bandwidth flash will need three to four times the amount of wafer capacity per exabyte, since it requires more on-chip space.
Morgan Stanley's Moore said the stock reaction to Sandisk's investor event was likely driven by its "reasonable long-term model" and commitment to returning 100% of excess cash to shareholders.
-Britney Nguyen
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