Bank of America Maintains Buy Rating on SanDisk with a Target Price of $2500

Bank of America has maintained its bullish rating on SanDisk following the company's latest financial report, believing that the market has underestimated the company's long-term profitability driven by AI storage demand. Bank of America reiterated its "Buy" rating for SanDisk, setting a target price of $2500, which implies an approximately 85% upside from the reference stock price of $1350.5. This target price is based on an expected earnings per share of $255 for 2027, with a valuation of about 10 times the price-to-earnings ratio. SanDisk's revenue for the fourth fiscal quarter reached $8.97 billion, a 51% quarter-over-quarter increase, exceeding the company's previous guidance of $7.75 billion to $8.25 billion. About two-thirds of the growth came from rising product prices, with the remainder attributed to an increase in storage bit shipments. During the same period, the company's gross margin rose to 84.6%, up from 78.4% in the previous quarter, also surpassing the prior expectation range of 79% to 81%. Bank of America expects SanDisk's earnings per share for the fiscal year 2027 to grow by 229% to $233.85, with revenue increasing by 160% to $52.6 billion. The company anticipates revenue for the next fiscal quarter to be between $10.3 billion and $10.8 billion, with earnings per share projected at $44 to $46, and gross margin expected to remain high at 83% to 85%. Bank of America stated that there are currently no clear signs of SanDisk's storage prices and profitability reaching a peak, and the expansion of AI infrastructure may continue to support the storage industry's economic cycle.

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