BofA reiterates Buy on Sandisk and raises price objective to $2,500

Overview

This is a company research and rating change report by Bank of America on Sandisk Corporation. The core focus is the F4Q26 earnings preview: BofA believes the NAND market supply-demand imbalance will persist through C27 and pricing strength will continue at least through mid-2027, and therefore raises fiscal 2026-2028 revenue and EPS forecasts and lifts the price objective to $2,500.

Core views

BofA's core view is that SNDK benefits from strong NAND pricing, AI- and data-center-driven eSSD demand, market share gains, joint venture relationships, and industry consolidation potential. The report expects both F4Q26 and F1Q27 results to come in meaningfully above market expectations and believes NBM long-term agreements will enable more cloud and client customers to lock in supply and pricing frameworks, thereby improving visibility into SNDK's revenue and gross margin.

Analysis framework

The report uses a combination of upward earnings revisions, comparisons between BofA and Street consensus, a breakdown of quarterly operating assumptions, and P/E multiple valuation. Key operating assumptions include bit shipment growth, ASP growth, gross margin, EPS, the proportion of customers signing long-term agreements, and comparisons of supply-demand signals with peers and competitors such as Micron and YMTC.

Methodology notes

• Valuation methodsP/E multiple method

  10x C27E EPS

  The $2,500 price objective is based on approximately 10x C27E EPS of $252; the report says this multiple is in line with the average level of global memory peers because of similar profitability.

• Earnings forecastBofA model vs Street

  BofA forecasts above Street consensus

  The report compares F4Q26 and F1Q27 revenue and EPS with Street expectations and company guidance to reflect BofA's more optimistic assumptions on NAND pricing and margins.

• Operations and earnings qualityiQmethod SM

  Business Performance and Quality of Earnings

  The report lists indicators such as ROCE, ROE, operating margin, free cash flow, cash realization ratio, asset replacement ratio, tax rate, and net debt-to-equity ratio to measure business performance and earnings quality.

Asset mapping & comparison

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

• Sandisk Corporation (SNDK.US)

  Core coverage name; rated Buy by BofA

  Strengths

  Benefits from NAND supply-demand imbalance, strong ASP, AI and data-center eSSD demand, market share gains, joint venture relationships, and industry consolidation potential.

  Weaknesses

  About 15% of revenue comes from consumer end markets, where customers are less willing to sign long-term agreements; earnings are highly sensitive to NAND pricing and the supply-demand cycle.

  Comparison

  BofA's forecasts for F4Q26 and F1Q27 revenue/EPS are both above Street; the report says SNDK's bit growth assumption is higher than Micron's recent disclosure, while ASP growth is lower than Micron's.

  Risks

  NAND oversupply leading to price declines, expansion by Chinese suppliers such as YMTC, slower-than-expected adoption of AI consumer products, and loss of eSSD market share.

• Micron Technology (MU)

  Peer comparison and NAND cycle reference

  Strengths

  Micron's recently disclosed strong ASP growth provides a reference point for NAND pricing strength.

  Weaknesses

  The report does not assign an investment rating or price objective to MU; it is mainly used to compare SNDK's bit and ASP assumptions.

  Comparison

  BofA expects SNDK's June-quarter bit growth to be higher than Micron's recent disclosure, but ASP growth to be lower than Micron's.

  Risks

  Changes in peer supply, pricing, and inventory could affect the market's judgment of SNDK's cycle strength.

• YMTC (Yangtze Memory Technologies Co. Ltd.)

  Potential competition and incremental supply risk

  Strengths

  The report acknowledges that YMTC is ramping rapidly and has the potential to affect the NAND supply landscape.

  Weaknesses

  BofA expects YMTC to focus more on Chinese customers, so the direct impact on the global market may be limited.

  Comparison

  Compared with SNDK, YMTC is positioned as a supply-side competitive variable rather than a valuation target in this report.

  Risks

  Overexpansion by Chinese suppliers or incremental supply entering the market could pressure NAND prices and weaken SNDK's margins.

Key data

• Rating and price objectiveBuy; PO 2,500.00 USD; current price 2,273.73 USDThe price objective was raised from $2,100 to $2,500, implying upside of approximately 9.95%.
• F4Q26 revenue/EPS forecast9.1bn USD / 37.01 USDAbove Street's 8.35bn USD / 34.26 USD, and also above company guidance of revenue 7.75-8.25bn USD and EPS 30-33 USD.
• F1Q27 revenue/EPS forecast11.5bn USD / 48.55 USDAbove Street's 10.4bn USD / 43.22 USD; BofA expects management guidance of revenue 11.25-11.75bn USD, gross margin 84%-86%, and EPS 47-50 USD.
• June-quarter operating assumptionsbit growth 13% q/q; ASP growth 35% q/qbit growth is higher than Micron's recent disclosure, while ASP growth is lower than Micron's recent disclosure.
• 2026E revenue/EPS20.361bn USD / 68.89 USDPrevious forecast was 20.281bn USD / 68.56 USD.
• 2027E revenue/EPS53.423bn USD / 233.07 USDPrevious forecast was 44.398bn USD / 187.65 USD, representing a significant upward earnings revision.
• 2028E revenue/EPS57.484bn USD / 254.24 USDPrevious forecast was 51.100bn USD / 222.06 USD.
• Valuation metrics2027E P/E 9.8x; 2028E P/E 8.9xThe table also lists 2027E EV/EBITDA of 7.3x and 2028E EV/EBITDA of 6.6x.
• Free cash flow2026E 7.848bn USD; 2027E 30.479bn USD; 2028E 37.204bn USDThe report expects free cash flow to improve substantially along with earnings and the NAND cycle.
• NBM long-term agreementsMost cloud and client customers are ultimately expected to signConsumer end markets account for about 15% of SNDK revenue, and the report believes this customer segment is less willing to sign long-term agreements.

Impact & implications

If BofA's assumptions play out, SNDK will be positioned within a combination of rising NAND prices, expanding AI and data-center storage demand, improving eSSD share, and better visibility from long-term agreements. The higher price objective reflects a higher C27 earnings base rather than multiple expansion; therefore, future share price performance depends more on NAND pricing, gross margin, and NBM signing execution.

Risks

• NAND oversupply leading to a sharp decline in prices.
• Intensifying competition and excessive capacity expansion from Chinese suppliers such as YMTC.
• AI-driven procurement coming in below expectations, weakening the sustainability of long-term memory demand.
• Adoption of AI consumer electronics products being slower than expected.
• SNDK's eSSD market share gains being slower than expected or turning into share loss.
• NBM long-term agreement signing rates, terms, or pricing mechanisms falling short of expectations, affecting revenue and gross margin visibility.

What to watch

• Whether actual F4Q26 bit growth, ASP growth, and gross margin are in line with BofA's assumptions.
• Whether management's F1Q27 guidance for revenue, gross margin, and EPS falls within BofA's expected range.
• The pace and coverage ratio of NBM long-term agreement signings by cloud and client customers.
• Whether NAND pricing strength can continue through mid-2027 and C27.
• Whether AI, data center, and eSSD demand continue to drive storage demand growth.
• The expansion pace and customer scope of YMTC and other Chinese NAND suppliers.
• Whether BofA's revised 2027E EPS of $233.07 and C27E EPS of $252 have a basis for realization.