BofA reiterates BUY on SNDK and raises target price to 2,500.00 USD

Overview

This is a company research and target price increase report on Sandisk Corporation (SNDK.US). BofA believes the NAND market supply-demand imbalance is still ongoing and that pricing strength will last longer, driving upward revisions to earnings forecasts for F4Q26, F1Q27, and fiscal 2027. The report reiterates a BUY rating and highlights valuation, joint venture partnerships, share gains, and long-term industry consolidation potential.

Core views

The core views include: first, the NAND market remains in a tight supply-demand phase in the short term, and SNDK is expected to continue benefiting from price increases through 2027; second, F4Q26 and F1Q27 revenue and EPS forecasts are meaningfully above market consensus; third, NBM contracts will improve business visibility and help maintain gross margin within the target range over the long term; fourth, data center, generative AI, and enterprise SSD share gains provide long-term demand support; fifth, the main risks come from NAND oversupply, YMTC capacity expansion, weaker-than-expected adoption of AI consumer products, and loss of eSSD share.

Analysis framework

The report uses a combination of upward earnings revisions, peer relative valuation, and the BofA iQmethod framework. The earnings forecast focuses on NAND bit growth, ASP growth, gross margin, and EPS; valuation applies about 10x C27E EPS of 252 USD to derive the 2,500.00 USD target price; it also compares BofA forecasts with Street estimates, company guidance, and Micron Technology's recent performance.

Methodology notes

• Earnings forecastQuarterly earnings preview and upward forecast revision

  Assess F4Q26 and F1Q27 earnings elasticity through forecasts for bit growth, ASP growth, revenue, gross margin, and EPS.

  BofA expects June-quarter bit growth of 13% quarter over quarter and ASP growth of 35% quarter over quarter, raising its F4Q26 revenue/EPS forecast to 9.1bn USD/37.01 USD, and forecasting F1Q27 revenue/EPS at 11.5bn USD/48.55 USD.

• Valuation methodsP/E target price method

  Derive the price target by multiplying C27E EPS by the target P/E multiple.

  The 2,500.00 USD target price is based on about 10x C27E EPS of 252 USD, a multiple in line with the global storage peer average due to similar profitability.

• Standardized quality metricsBofA iQmethod

  Measure operating and financial quality through business performance, earnings quality, and a valuation toolbox.

  The report discloses standardized metrics including ROCE, ROE, operating margin, free cash flow, cash conversion, net debt-to-equity, P/E, EV/EBITDA, and free cash flow yield.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• SNDK.US

  Core covered name

  Strengths

  Strong NAND pricing, tight supply-demand balance, NBM contracts improving long-term visibility, eSSD share gains, support from generative AI and data center demand, and potential value from industry consolidation.

  Weaknesses

  About 15% of revenue comes from consumer end markets, where customers may be less willing to sign long-term agreements; the share price is already close to the target price, implying limited upside.

  Comparison

  BofA's F4Q26 and F1Q27 revenue/EPS forecasts are both above Street; the target price multiple is in line with the global storage peer average.

  Risks

  Sharp price declines due to NAND oversupply, competition from Chinese suppliers such as YMTC, slower-than-expected adoption of AI consumer products, and loss of eSSD market share.

• MU

  Peer and recent NAND pricing reference

  Strengths

  Micron Technology's recently disclosed data provides a reference point for NAND bit growth and ASP trends.

  Weaknesses

  The report does not rate or value MU, using it only as a comparison for SNDK's quarterly assumptions.

  Comparison

  BofA's June-quarter bit growth assumption for SNDK is higher than MU's recently disclosed level, but its ASP quarter-over-quarter growth assumption is lower than MU's disclosed level.

  Risks

  If peer pricing or demand performance weakens, it could undermine the logic for upward revisions to SNDK earnings.

• YMTC

  Potential source of competition and supply risk

  Strengths

  Rising domestic NAND supply capability in China may strengthen its competitiveness among Chinese customers.

  Weaknesses

  The report expects YMTC to focus mainly on Chinese customers, so its short-term impact on global NAND pricing may be limited.

  Comparison

  Compared with SNDK, YMTC is positioned in the report mainly as a risk of added supply and pricing pressure, rather than a positive driver of current earnings forecasts.

  Risks

  If YMTC expands capacity faster or if supply spills over into the global market, it could worsen NAND supply and pressure prices.

Key data

• Rating and target priceBUY; 2,500.00 USDThe target price was raised from 2,100.00 USD to 2,500.00 USD.
• Current share price2,273.73 USDPrice disclosed on the stock data page of the report.
• Implied upsideabout 9.95%Calculated based on the target price of 2,500.00 USD and current price of 2,273.73 USD.
• F4Q26 revenue/EPS forecast9.1bn USD / 37.01 USDAbove Street's 8.35bn USD / 34.26 USD, and also above company revenue guidance of 7.75-8.25bn USD and EPS guidance of 30.00-33.00 USD.
• F1Q27 revenue/EPS forecast11.5bn USD / 48.55 USDAbove Street's 10.4bn USD / 43.22 USD; BofA expects management guidance of 11.25-11.75bn USD revenue, 84-86% gross margin, and EPS of 47-50 USD.
• June-quarter bit and ASP assumptionsbit QoQ +13%; ASP QoQ +35%The report believes pricing improvement is the main driver of the upward forecast revision.
• Fiscal 2026 revenue/EPS20.4bn USD / 68.89 USDPrevious forecast was 20.3bn USD / 68.56 USD.
• Fiscal 2027 revenue/EPS53.4bn USD / 233.07 USDSignificantly above the previous revenue forecast of 44.4bn USD and EPS of 187.65 USD.
• Fiscal 2028 revenue/EPS57.5bn USD / 254.24 USDPrevious forecast was 51.1bn USD / 222.06 USD.
• 2026E ROE76.0%2026E ROE disclosed on the stock data page.
• 2027E free cash flow30.479bn USDThe free cash flow table forecasts a significant increase in 2027E free cash flow.

Impact & implications

The report has a positive implication for SNDK: if strong NAND pricing and continued signing of NBM contracts persist, the market may continue to revise up fiscal 2027 earnings expectations, and the stock could be supported by high gross margins, improving cash flow, and long-term supply-demand visibility. However, with the current share price already close to the target price, further upside depends more on pricing continuing to exceed expectations, management issuing strong F1Q27 guidance, and investors believing the industry will not quickly reverse due to incremental supply.

Risks

• NAND oversupply could lead to a sharp decline in prices.
• Expansion and competition from Chinese suppliers such as YMTC could pressure SNDK's pricing and market share.
• If AI-driven consumer electronics purchasing falls short of expectations, it could weaken long-term storage demand.
• If eSSD market share gains are slower than expected or if share is lost, the growth thesis will be affected.
• BofA discloses investment banking, market-making, and other relationships with the issuer; investors should be aware of potential conflicts of interest.

What to watch

• Differences between actual F4Q26 revenue, EPS, gross margin and company guidance.
• Whether management's F1Q27 revenue, gross margin, and EPS guidance meets BofA's expectations.
• Whether NAND ASP quarter-over-quarter increases can be sustained through mid-2027.
• The proportion of NBM contract signings and their contribution to revenue visibility beyond F28.
• Willingness of cloud, client, and data center customers to sign long-term agreements.
• YMTC's capacity expansion pace and whether it expands beyond Chinese customers into broader markets.
• Whether demand from AI consumer products and enterprise SSDs continues to support the NAND upcycle.