SanDisk (NASDAQ:SNDK) shares are trading lower on Friday despite the company’s upbeat fourth-quarter financial results on Thursday. This comes amid analyst warnings that softer third-quarter margin forecasts could weigh on shares.
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Wall Street analysts boosted their outlook on SanDisk, with Wells Fargo’s Aaron Rakers raising his price target from $45 to $50 while keeping an Equal-Weight rating. Cantor Fitzgerald’s C.J. Muse reaffirmed an Overweight rating with a $50 target, and Goldman Sachs’ James Schneider maintained a Buy with a $55 price target.
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Goldman Sachs Weighs In
Schneider noted the company’s strong revenue beat and above-consensus guidance were overshadowed by weaker-than-expected gross margin guidance for the third quarter.
The analyst said investor expectations were already elevated after strong NAND results from peers like Samsung Electronics Co Ltd (OTC:SSNLF) and Kioxia. Still, he remains confident in SanDisk’s revenue trajectory and sees Street estimates as too low heading into 2026.
SanDisk reported second-quarter revenue of $1.90 billion, topping both Goldman’s $1.84 billion forecast and the Street’s $1.80 billion. Gross margins of 26.4% were in line with Goldman but above consensus.
Adjusted EPS of 29 cents beat Goldman’s 12 cent estimate and the Street’s 5 cent.
For the third quarter, SanDisk guided revenue to $2.15 billion at the midpoint, above both Goldman’s $2.09 billion and the Street’s $2 billion, but projected gross margin of 29% — below Goldman’s 29.6% and well under the Street’s 31.2%. EPS guidance of 70 cents to 90 cents (midpoint 80 cents) also missed Goldman’s $1.16 estimate and the Street’s 95 cents.
Schneider attributed the softer margin outlook to ongoing fab startup costs of roughly $60 million and underutilization charges of $10–$15 million, but expects margins to ramp significantly as these costs fade and pricing improves in a NAND market he sees as about 5% undersupplied in late 2025.
Schneider also highlighted progress in enterprise SSD qualifications and SanDisk’s launch of a 256TB NVMe drive as potential growth drivers.
Schneider cut his EPS forecasts by about 2% to reflect below-the-line adjustments despite higher revenue projections and introduced 2028 estimates.
He said the NAND industry’s prudent supply behavior supports pricing, and if competitors remain disciplined, SanDisk could see significant margin expansion in the coming quarters.
SNDK Price Action: SanDisk stock is down 3.73% at $44.94 at publication on Friday.
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