Price target increase and valuation context
Morgan Stanley raised its price target on SanDisk (NASDAQ:SNDK) to $690.00 from $483.00 while keeping an Overweight rating on the shares. The new target equates to a roughly 28% premium to SanDisk’s prevailing share price of $539.30. Separate data from InvestingPro cited in the market discussion indicates that the stock may be overvalued at present, noting an RSI reading that places the shares in overbought territory.
Industry cycle and company guidance
The brokerage highlighted what it describes as the strongest memory industry upcycle it has observed in 30 years. SanDisk’s guidance underpins that view: the company is pointing to revenue growth exceeding 52% quarter-over-quarter, even as bit shipments edged down modestly. Morgan Stanley interprets that combination as evidence that average selling prices rose by roughly 60% or more sequentially in March. InvestingPro data referenced alongside Morgan Stanley’s analysis also shows that analysts expect sales growth of 52% for the current year.
Margins, EPS guidance and analyst revisions
Morgan Stanley noted that SanDisk guided margins up by 15% quarter-over-quarter, a gain materially smaller than the magnitude of the ASP increase. The firm argues this differential suggests the company’s $13 EPS guidance - which represents about 2.5 times the consensus estimate cited by the report - could be conservative. Over the last twelve months SanDisk reported a diluted EPS of -$7.15, but InvestingPro data in the same discussion shows analysts now anticipate EPS of $14.12 for the fiscal year, and nine analysts have recently raised their earnings estimates.
Manufacturing agreement and accounting treatment
SanDisk also announced an extension of its joint venture with Kioxia at the Yokkaichi site through 2034. As part of that agreement, SanDisk will pay Kioxia $1.165 billion for manufacturing services covering 2026 through 2029. Morgan Stanley’s analysis notes that the expenses associated with this contract will be recorded in SanDisk’s cost of goods sold line for the duration of the agreement.
Recent quarterly results
In recent company reporting, SanDisk posted second-quarter results for fiscal year 2026 that materially exceeded analyst projections. The company reported EPS of $6.20, versus a forecast of $3.49, a surprise of approximately 77.65%. Revenue for the period came in at $3.03 billion, ahead of the $2.67 billion estimate. The report notes that analyst firms have taken note of these developments, though specific upgrades or downgrades were not cited. Collectively, these results are described as evidence of the company’s ability to outperform market projections.
Context for investors
The confluence of a pronounced industry upcycle, strong sequential pricing indications, higher guidance for revenue and margins, a multi-year manufacturing agreement, and a quarter that beat consensus has prompted Morgan Stanley’s valuation lift and maintained bullish stance. At the same time, market indicators and accounting commitments highlighted in the analysis introduce considerations investors may weigh as they assess position sizing and timing.