SanDisk stock is stuck in a bear market: buy the dip or sell the rip?
AI Sentiment: 35/100 Bearish
This score is generated through AI-driven analysis of the article's content.
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Buy SanDisk (SNDK) after the selloff into the 38.2% Fibonacci retest and below the 50-day MA. The article points to explosive revenue growth (multi-quarter surge) and strong multi-year contracts that smooth the boom-bust cycle. Valuation supports it: forward P/E ~24 and very low forward PEG (~0.13) versus the growth rate. Thesis: the market is over-discounting the memory downturn while fundamentals and contract visibility keep earnings power rising; expect a rebound toward the 50% retracement (~$1,200) and then a relief rally.
Key Risk: Memory demand or pricing breaks again and the revenue surge reverses faster than contracts can protect margins.
Sell/short Western Digital (WDC) or Micron (MU) on strength versus SanDisk. The article says SNDK weakness is moving with the broader memory group (Micron/Samsung/WDC). If the group is still in a bear tape, the highest-beta names typically underperform on any incremental capex caution. Thesis: SNDK’s contract visibility and valuation cushion make it the relative winner, so the rest of the complex should lag on bounces.
Key Risk: A broad hyperscaler capex re-acceleration lifts the whole memory complex and forces shorts to cover across MU/WDC.
- SanDisk stock continues its strong downtrend this week.
- It has dropped by 35% from its highest point this year.
- The stock may drop further into the big tech earnings.
SanDisk stock has continued its weakness this week, falling to its lowest level since May 22. It has dropped by 35% from its highest level this year. Still, top analysts tracking the company have maintained a bullish outlook, pointing to its strong growth.
Many analysts are bullish on the SanDisk stock
Top analysts covering SanDisk believe the stock has significant upside potential. The most bullish among them is Susquehanna's Mehdi Hosseini, who has a price target of $3,250—implying a 115% upside from the current level.
Bernstein has a target of $3,000, while Bank of America expects the shares to jump to $2,500. Other bullish analysts on the stock are from companies like Evercore ISI, Citigroup, and Cantor Fitzgerald.
According to MarketBeat, 19 analysts rate SanDisk as a buy, while five recommend holding the stock. The average price target is $1,803, up sharply from $692 just three months ago.
Reading through analyst reports, most cite the company's strong revenue and profit growth, as well as its growing portfolio of multi-year contracts. These long-term agreements provide greater revenue visibility and help reduce the industry's traditional boom-and-bust cycles.
SanDisk’s revenue is soaring
SanDisk’s quarterly revenue jumped to $5.95 billion in the previous quarter, up sharply from $1.69 billion in the same period last year. Its nine-month revenue soared to $11.28 billion from $5.4 billion.
This surge happened as the volume and memory prices soared. Demand has remained at an elevated level from its top customers like Apple, Microsoft, Amazon, and Google.
Judging by the recent Micron and Samsung earnings, chances are that its earnings will continue soaring. The average estimate among analysts is that its quarterly revenue jumped by 339% in the last quarter to $8.35 billion.
Its revenue in the current quarter is expected to grow by 360% to $10.6 billion. These numbers are substantially strong considering that SanDisk made $7.2 billion in the last financial year.
Most importantly, SanDisk is not all that expensive, considering its revenue growth. While its trailing twelve months (TTM) price-to-earnings ratio is high at 51, its forward price-to-earnings ratio of 24 is quite modest. It also has a small forward PEG ratio of 0.13.
The risk, however, is that the company is in an industry that regularly experiences boom and bust cycles. In 2022, its revenue jumped to $9.7 billion from $5.5 billion a year earlier. The situation changed in 2023 when its revenue tumbled to $6 billion as its inventories soared.
What next for the SNDK stock price?
SanDisk stock chart | Source: TradingView
The daily chart shows that SanDisk stock has plunged from $2,355 in June to $1,510 in the pre-market session. This retreat coincided with the drop in other memory companies like Micron and Western Digital.
It has retested the 38.2% Fibonacci Retracement level. It has also plunged below the 50-day moving average and is hovering at the strong, pivot reverse level of the Murrey Math Lines tool.
Therefore, the most likely SNDK stock forecast is bearish, with the next target being the 50% retracement level of $1,200. It may then bounce back if top hyperscalers reaffirm their capital spending plans.
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