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SanDisk (SNDK) stock is in the spotlight on July 23 after a senior Susquehanna analyst lowered his price target for the flash memory products specialist. In a research note today, analyst Mehdi Hosseini set a revised downward price target of $3,050 for SNDK, which nevertheless indicates a potential upside of an exciting 80% from current levels.
SanDisk stock have retreated sharply in recent weeks amid a broader technological defeat. As of this writing, they are down almost 30% from their June high.
Why Susquehanna Cut Its Price Target on SNDK Stock
According to Hosseini, the reduced price target reflects updated internal estimates following a correction to the company’s financial model, which previously incorporated inaccurate sales and earnings per share (EPS) estimates.
Additionally, the memory architecture for artificial intelligence Inference applications (AI) remain “somewhat unstable.”
Specifically, the Susquehanna analyst noted uncertainty around how memory hierarchy inference would split workloads between DRAM and local SSDs.
If AI companies aggressively adopt KV cache offloading, enterprise demand for SSD would increase quite significantly. On the contrary, if they continue to rely primarily on DRAM/HBM, demand for SanDisk’s flagship product will be lower.
Why Mehdi Hosseini Is Still Bullish on SanDisk Stock
Despite lowering the price target, Susquehanna remains strongly optimistic about the long-term trajectory of SanDisk stock.
According to Barchart, the company is expected to report more than $33 per share earnings (EPS) for its current financial quarter on August 5. This would represent a staggering 167x year-over-year growth.
In his report, Hosseini highlighted key structural catalysts for his construction vision, including the rise of BiCS8 and BiCS10 NAND technologies, which are expected to drive initial annual cost-per-bit reductions of around 10%.
Lastly, the analyst is positive about SNDK’s long-term contractual agreements with hyperscalers as they offer significant visibility into future revenue.
What is the consensus rating on SanDisk?
While not as bullish as Susquehanna, other Wall Street firms also recommend sticking with SNDK stock for the long term.
According to Barchart, consensus rating SanDisk is currently at “Strong Buy,” with an average price target of around $2,368, indicating an upside potential of over 40% over the next 12 months.
