Second-quarter performance
SanDisk announced its fiscal Q2 results on 29 January 2026. Exact figures were not disclosed in the broker notes, but both Barclays and Bank of America described the performance as an earnings “beat.” Bank of America highlighted that revenue and EPS outpaced prior guidance, prompting the firm to raise its full-year forecasts. For fiscal 2026, the bank now projects revenue of $15.7 billion, up from its previous estimate of $10.9 billion, and EPS of $39.50, more than double its prior view of $16.21. The upward revision is tied to expectations of wider gross margins and overall profitability.
Guidance for the third quarter
In addition to the upbeat second-quarter numbers, SanDisk’s outlook for fiscal Q3 was described by Bank of America as “massively above Street expectations.” While exact guidance ranges were not provided in the analyst commentary, the wording indicates that management anticipates continued momentum in demand and pricing for its NAND-based products. Barclays echoed this sentiment when it revised its valuation model, nearly doubling the target price despite leaving the rating at Equal Weight.
Drivers behind the upgrades
Analysts cited several factors for their more optimistic views:
• Higher average selling prices (ASP) for flash memory. Industry supply constraints and steady data-center demand have bolstered pricing across NAND components.
• Operational separation. SanDisk completed a previously announced legal and operational separation of certain business lines earlier in 2026, which Barclays believes will streamline cost structures and improve earnings visibility.
• Improved margin outlook. Bank of America expects gross margins to expand faster than previously modeled, reflecting a mix shift toward enterprise-grade solid-state drives and embedded solutions.
• Stronger revenue base. Revised top-line projections from Bank of America imply nearly 44% year-over-year growth for fiscal 2026, compared with the bank’s earlier forecast of roughly 5%.
Company background
Headquartered in Milpitas, California, SanDisk develops, manufactures and sells flash-based data storage products including solid-state drives, memory cards and embedded solutions. The company markets its products to original equipment manufacturers, data-center operators and retail consumers across the United States, Europe, the Middle East, Africa and Asia-Pacific. Core technology is built on NAND flash, a non-volatile memory architecture widely used in mobile devices, servers and automotive systems. According to the research group IDC, global shipments of enterprise solid-state drives are projected to grow at a compound annual rate of more than 20% through 2027, underscoring demand drivers referenced by analysts.
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Valuation context
Prior to the earnings release, SanDisk’s shares had been trading at what several analysts viewed as a discount to peers in the semiconductor and storage industries. Barclays’ revised target of $750 represents a potential doubling from the stock’s mid-January closing level, while Bank of America’s $850 target implies even greater upside. Both targets factor in a higher earnings base and multiple expansion linked to margin recovery. Barclays chose not to move its rating above Equal Weight, citing balanced risk-reward after the post-earnings rally, whereas Bank of America maintained its Buy stance based on what it sees as further room for multiple appreciation.
Market reaction
Following the report and subsequent analyst calls, SanDisk shares rose sharply in late-January and early-February trading. The magnitude of the move was not detailed in the analyst summaries, but trading volumes spiked as investors digested the new guidance and price targets. Market participants appear to be recalibrating expectations for earnings power in light of the higher-than-anticipated ASPs and cost efficiencies stemming from the separation process.
Industry environment
The NAND flash market has experienced cyclical swings tied to supply–demand imbalances, capital-expenditure cycles and macroeconomic conditions. Over the past year, reduced capital spending by hyperscale cloud operators led to inventory build-ups, pressuring prices. Recent commentary from several storage providers points to a correction in supply and the early stages of a rebound in pricing, which has benefited SanDisk. Additionally, continued adoption of solid-state storage in personal computers, smartphones and automotive applications supports a broader demand base. Geopolitical factors, including U.S. export restrictions and trade policies, could introduce volatility in the supply chain, but analysts at both Barclays and Bank of America did not flag immediate concerns in their latest notes.
Outlook
Management’s third-quarter forecast suggests continued momentum for the remainder of the fiscal year. Bank of America’s updated model indicates revenue and EPS acceleration through fiscal 2026, supported by elevated ASPs, operational efficiency and product-mix improvements. Barclays’ decision to retain an Equal Weight rating implies a more cautious view on additional upside beyond the newly established target. Both firms will monitor execution on cost controls and market pricing trends as key variables for future revisions.
Crédito da imagem: Insider Monkey
