Sandisk (NASDAQ:SNDK) is heading into its fiscal third-quarter earnings report with momentum that could push results well ahead of its own guidance, according to analysts at Wedbush.
Wedbush analysts said that while Sandisk guided for roughly 55% price increases in the current quarter, pricing gains through the period suggest the company should comfortably exceed that initial outlook.
Analysts raised their price target on the stock to $1,200 from $740 and lifted its earnings estimates to reflect stronger-than-expected conditions in the NAND market.
Shares are currently trading around $1,099 ahead of its earnings, up 3.3% on the day.
The firm raised its assumption to a 65% lift in pricing, or approximately halfway between Sandisk's own guide and the mid-70s gains reported by competitor Hynix, though it noted that industry participants have reported Sandisk pricing increases of as much as 100%. On that basis, Wedbush lifted its gross margin forecast for the quarter from 65% to 67%, and its earnings per share estimate from $13.12 to $14.66.
Looking to fiscal Q4, the firm raised its assumption to 55% growth in average selling prices, in line with what management guided last quarter. Wedbush said it believes industry pricing gains could come in closer to 80% and that Sandisk has been more aggressive than peers in pushing pricing.
But analysts also noted that the company's actual gains will depend on where pricing landed in the current quarter, and that management is likely to position the company to once again exceed guidance.
Even on a conservative basis, Wedbush sees Q4 gross margins reaching 78.7% and earnings per share coming in above $27, up from prior estimates of 70.8% and $16.99, respectively.
On the longer-term outlook, Wedbush said it sees a potential path to gross margins above 80% and earnings per share of $40 or more over the next couple of quarters, assuming no major shock to NAND and storage demand.
The firm said it believes robust earnings are likely to be sustained through 2027, with significant new fabrication capacity unlikely before late 2027 or 2028, a dynamic it expects to generate substantial cash flow over the period.