Senior analyst lowers San Disk target price, but optimistic about AI storage demand in the long term
Investment bank Susquehanna analyst Mehdi Hosseini (Mehdi Hosseini) will (NASDAQ: SNDK) lowered its target price from $3,250 to $3,050, but maintained a "buy" rating. The new target price means there is still about 80% upside potential from the current stock price. Husseini said the target price reduction was mainly due to the company revising the revenue and earnings per share forecast errors in its previous financial model. In addition, there are still uncertainties in the storage architecture of AI inference applications - if AI companies adopt KV Cache offloading solutions, the demand for enterprise-level SSDs will be greatly increased. On the contrary, if they continue to rely on DRAM/HBM, the demand for SanDisk's flagship products will be lower than expected. Despite the price target cut, Wall Street's overall rating on SanDisk is still a "Strong Buy," with an average target price of about $2,368, suggesting there is still room for more than 40% upside in the next 12 months. Of the 24 analysts tracked by FactSet, 21 have buy or strong buy ratings. SanDisk's stock price has risen by more than 858% since the beginning of this year. It has recently fallen by about 30% as the technology sector has retreated from highs. The company's previously announced third-quarter results showed that revenue of US$5.95 billion far exceeded expectations, adjusted earnings per share were US$23.41, and gross profit margin increased significantly to 78.4%. The company has signed multiple long-term supply agreements with a term of three to five years and received financial commitments of more than US$11 billion.