KIOXIA 4Q results beat expectations; BofA raises target price to ¥61,000 and reiterates Buy

Overview

This report is BofA's review of KIOXIA's 4Q results and 1Q guidance. The report believes that KIOXIA is benefiting from AI-driven data center demand and NAND supply constraints, with ASP, revenue, and earnings all significantly beating expectations. As a result, it raises earnings forecasts and the target price while reiterating a Buy rating.

Core views

The core views include: first, generative AI inference demand is driving NAND market expansion; second, limited new industry capacity is keeping supply and demand tight; third, long-term contracts will help stabilize ASP after 2027; fourth, after balance sheet improvement, the company may prioritize dividends over buybacks.

Analysis framework

The report analyzes the company through the lenses of earnings variance, sales and ASP guidance, industry supply-demand views, earnings forecast revisions, and relative valuation, and compares KIOXIA's valuation multiple with the average level of storage semiconductor peers.

Methodology notes

• Valuation methodsP/E valuation

  The target price is based on 8x FY3/27 EPS forecast

  BofA sets KIOXIA's target price at ¥61,000 using an 8x FY3/27 EPS valuation multiple, which is in line with the average level of storage industry peers.

• Earnings forecastearnings revision

  Upward revision to FY3/27 operating profit and EPS forecasts

  Because 1Q sales and ASP guidance were significantly stronger than previous assumptions, BofA raises its FY3/27 operating profit and EPS forecasts by 52% and 54%, respectively.

• Quality and comparison metricsiQmethod

  BofA standardized research metrics framework

  The report appendix explains that iQmethod is used to maintain global consistency in research standards across business performance, earnings quality, and validation metrics, and to support comparable valuation analysis.

Asset mapping & comparison

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

• KIOXIA (285A.T)

  Research target

  Strengths

  Benefits from AI inference demand, rising NAND prices, industry supply constraints, and a potential dividend initiation.

  Weaknesses

  The business remains highly exposed to the memory cycle, and earnings are sensitive to ASP and capex competition.

  Comparison

  The target price uses 8x FY3/27 P/E, which the report says is in line with the average level of storage semiconductor peers.

  Risks

  A pullback in data center investment, deterioration in NAND supply and demand, and rising costs of components such as DRAM could pressure earnings.

• SanDisk

  Peer and market expectation reference

  Strengths

  The high expectations after SanDisk on April 30 provided an industry reference for interpreting KIOXIA's results.

  Weaknesses

  The report does not provide an independent rating or full financial analysis of SanDisk.

  Comparison

  KIOXIA's 4Q operating profit performance was broadly in line with the market expectations raised after SanDisk.

  Risks

  It serves only as peer background information and cannot replace analysis of SanDisk's own investment conclusion.

Key data

• RatingBuyThe report reiterates a Buy rating.
• Target price¥61,000Raised from the previous ¥50,000.
• Current price¥44,450Price disclosed on the report cover.
• Implied upsideapproximately 37.2%Estimated based on the target price of ¥61,000 and the current price of ¥44,450.
• FY3/27 operating profit forecast revision+52%Driven by stronger ASP and 1Q guidance.
• FY3/27 EPS forecast revision+54%Revised sharply upward in line with the operating profit forecast.
• 1Q sales guidance+75% QoQ37%-44% above BofA and Visible Alpha expectations.
• 4Q non-GAAP operating profit¥599.1bnUp 117% QoQ and 8%-12% above BofA and VA expectations.

Impact & implications

If AI demand and tight NAND supply-demand conditions persist, KIOXIA's earnings leverage and valuation recovery potential may continue to improve; meanwhile, long-term contracts, progress in advanced NAND technology, and capital allocation policy will affect the market's judgment on the sustainability of its cycle.

Risks

• Data center investment may decline significantly due to factors such as power supply constraints.
• If NAND manufacturers resume competing through capital expenditures, the supply-demand balance may deteriorate.
• Rising costs of components such as DRAM may compress profits.
• If AI demand or progress on long-term contracts falls short of expectations, ASP stability may be weaker than assumed in the report.

What to watch

• Progress on long-term contracts at the June 2 Investor Day, especially their support for NAND price stability.
• Development status of XL-Flash, BiCS9, and BiCS10.
• Capital allocation policy, including dividends and capital expenditures.
• NAND industry bit growth, supply-demand gap, and ASP trends in 2026-2027.
• Market share gain opportunities for enterprise SSDs and high-capacity BiCS8 QLC SSDs.