Bank of America remains bullish on SanDisk: AI storage demand is expected to drive sustained profitability, and the logic behind its target price hike remains unchanged.
1 hours ago
After SanDisk’s latest earnings report, Bank of America maintained a bullish outlook and reaffirmed its "Buy" rating on the company, arguing the market has underestimated SanDisk’s long-term profitability driven by AI storage demand. It kept a $2,500 price target, implying roughly 85% upside from the reference share price of $1,350.5. The target is based on 2027 projected earnings per share (EPS) of $255 and a valuation of around 10 times earnings. SanDisk was previously viewed by investors as a typical cyclical stock, but Bank of America believes that as AI development boosts data storage demand and enterprise-grade SSD penetration rises, the company’s current profit levels could be more durable than the market expects. Earnings data showed SanDisk’s fourth fiscal quarter revenue hit $8.97 billion, up 51% sequentially, exceeding its prior guidance of $7.75 billion to $8.25 billion. About two-thirds of the growth came from product price hikes, with the remainder from increased storage bit shipments. Its gross margin rose to 84.6% in the period, up from 78.4% in the prior quarter and beating the expected range of 79% to 81%. Bank of America forecasts SanDisk’s fiscal 2027 EPS will surge 229% to $233.85, while revenue will grow 160% to $52.6 billion. The company projected next fiscal quarter revenue of $10.3 billion to $10.8 billion, EPS of $44 to $46, and gross margin is expected to hold steady at a high 83% to 85%. Bank of America noted no clear signs have emerged that SanDisk’s storage prices and profitability have peaked, and AI infrastructure expansion is likely to continue supporting a favorable cycle for the storage sector.
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