Bernstein’s SanDisk forecast reboot sparks massive target upgrade

Bernstein expert Mark Newman raised his terms people connected SanDisk (SNDK) to $3,000 from $1,700 this week, portion keeping an Outperform standing connected the shares.

Newman is simply a 5-star expert connected TipRanks, ranking 91st retired of much than 12,300 Wall Street analysts with an 80% occurrence complaint connected his calls.

That way grounds matters present due to the fact that his lawsuit isn't built connected NAND prices spiking again.

It's built connected SanDisk nary longer needing them to.

Memory has ever been a brutal commodity concern

For decades, NAND flash representation traded similar wheat oregon oil. Prices surged erstwhile request outran supply, past crashed erstwhile manufacturers flooded the marketplace with caller capacity.

Customers held the leverage successful that arrangement, escaped to locomotion if spot prices fell, and suppliers had small recourse erstwhile a declaration ended.

That dynamic made representation stocks notoriously hard to clasp done a cycle. A large 4th contiguous said thing astir adjacent year, since the aforesaid oversupply that crushed prices erstwhile could ever return.

Investors who bought the highest often spent the adjacent downturn waiting to get even.

Bernstein raised its SanDisk terms people to $3,000 from $1,700, citing caller semipermanent contracts with terms floors adjacent 29 cents per gigabyte.SweetBunFactory / Getty Images

SanDisk's ain disclosures backmost up the declaration displacement

SanDisk has been telling this communicative itself. In its fiscal third-quarter results,

CEO David Goeckeler said the institution is "advancing to a caller concern exemplary built connected multi-year lawsuit engagements backed by steadfast fiscal commitments."

That's firm connection for the aforesaid displacement Bernstein is present pricing in.

By aboriginal May, SanDisk had signed 5 of these semipermanent agreements, and an Investing.com transcript of the net telephone quoted CFO Luis Visoso confirming they covered much than a 3rd of SanDisk's spot shipment successful fiscal 2027.

That's a meaningful stock of full output locked into pricing presumption acceptable successful advance, not negotiated 4th to 4th connected the spot market.

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The caller contracts are stronger than the header suggests

Bernstein's investigation goes further than what SanDisk has spelled retired publicly. Older semipermanent agreements were written successful the customer's favor.

The caller procreation locks successful fixed oregon range-bound prices, requires upfront fiscal commitments from buyers, and runs longer.

Newman adds a item astir sum has missed, according to the TipRanks report. The fiscal guarantees successful these contracts aren't fixed amounts that shrink successful relevance implicit time. As customers gully down the declaration and gross gets booked, the remaining warrant covers a larger stock of what's left, meaning the extortion strengthens successful the aboriginal years of the deal.