Goldman Sachs: SanDisk Earnings Beat Expectations but Guidance Misses Most Optimistic Outlook, Initiates Coverage with Buy

TechFlow news, According to TechFlow Research, SanDisk's Q2 revenue was $8.97 billion, exceeding Goldman Sachs' expectations by 1.4% and market expectations by 2.9%, gross margin was 84.6%, and non-GAAP earnings per share was $39.25. Q3 revenue guidance midpoint was $10.55 billion, below Goldman Sachs' expectations by 9.5% and market expectations by 5.4%, gross margin guidance of 84% was 267 basis points below market expectations, and earnings per share guidance midpoint of $45 met market expectations but was lower than Goldman Sachs' $49.95. The stock price has retraced 40% from its June high.

Goldman Sachs issued a buy rating in its initial coverage report on August 5, with a target price of $2,200, corresponding to approximately 54% upside potential. Goldman Sachs believes the negative reaction following the earnings report was primarily due to expectation gap correction rather than fundamental deterioration, demand for NAND from AI data centers is forming a new growth curve, and newly signed long-term agreements are improving revenue visibility. Goldman Sachs maintains a neutral rating on Micron, believing that SanDisk's weak guidance will also drag down Micron, as terminal demand for both companies in the NAND storage market highly overlaps.