Jefferies Lowers SanDisk Target Price to $1,750, Maintains Buy Rating

On August 6, Jefferies lowered the target price for SanDisk (SNDK) from $3,000 to $1,750 while maintaining a buy rating. Analyst Blayne Curtis stated that despite the company's strong performance in the June quarter, the guidance for the September quarter only meets expectations, which may dampen investor enthusiasm. SanDisk expects the year-over-year growth rate of NAND revenue in the September quarter to slow down, with bit shipments and average selling prices increasing at a moderate pace. Management has lowered the gross margin guidance, as the lower margins from long-term agreements offset the benefits of price improvements. The edge business was the largest contributor to growth in the June quarter, with revenue increasing nearly 400% year-over-year, accounting for 61% of total revenue. Jefferies believes this may include aggressive inventory builds, which could translate into short-term pressure on bit shipment growth in the coming quarters. Revenue from the consumer business fell 32% quarter-over-quarter to $556 million, primarily due to price increases compressing market demand. The data center is expected to become SanDisk's main growth engine in the future, with a new business model extending to eight customers in the data center and edge business, and commitments from customers for planned bit production expected to exceed 50% in fiscal year 2027 and about 67% in fiscal year 2028.

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