Sandisk (SNDK): Evaluating Valuation as Analyst Upgrades and AI Tailwinds Boost Investor Optimism

If you have been eyeing Sandisk (SNDK), recent headlines have made this stock hard to ignore. There is a wave of optimism rolling through the market as analysts and investors focus on the company’s exposure to booming AI data center demand, supply dynamics in the NAND memory space, and fresh momentum after Sandisk’s spinoff from Western Digital. The latest burst of analyst upgrades, together with talk about margin expansion and improving fundamentals, is sparking renewed interest even as the company’s removal from the FTSE All-World Index appears more like background noise than a red flag.

Over the past few months, Sandisk’s share price has surged, more than doubling since its relisting earlier this year and reaching a new all-time high in September. Momentum has come hand in hand with bullish analyst commentary citing Sandisk’s undervaluation relative to its assets and improving industry tailwinds. Short-term price action has certainly been volatile, but the stock’s performance stands out in a sector energized by AI infrastructure spending and tight memory supply conditions.

After such a sharp run, is the market underestimating Sandisk’s potential, or has the recent enthusiasm already priced in future growth?

Price-to-Sales of 1.9x: Is it justified?

Sandisk is currently trading at a Price-to-Sales (P/S) ratio of 1.9x, which places it in a unique position relative to both its peers and the broader tech sector. The P/S ratio measures how much investors are willing to pay per dollar of a company’s sales, making it especially relevant for tech companies that may be experiencing rapid growth or volatility in earnings.

According to available data, Sandisk appears to be attractively valued by this metric when compared to the average P/S ratio of its direct peer group, which stands at 4x. This suggests the market is pricing Sandisk’s revenues at a discount relative to similar companies and may be underestimating its future revenue potential. However, when measured against the broader US Tech industry average P/S ratio of 1.6x, Sandisk is slightly more expensive. This could reflect heightened optimism or unique company-specific prospects.

The implication is clear: investors may be getting good value based on peer comparison, but a broader industry view calls for more scrutiny regarding whether Sandisk’s positioning and growth outlook can justify even this modest premium to sector norms.

Result: Fair Value of $160.45 (UNDERVALUED)

See our latest analysis for Sandisk.

However, persistent net losses and a price trading well above analyst targets indicate that the bullish outlook could quickly reverse if there are any disappointing results.

Find out about the key risks to this Sandisk narrative.

Another View: What Does the SWS DCF Model Say?

Looking beyond sales multiples, our SWS DCF model also points to undervaluation for Sandisk right now. This approach uses long-term cash flows rather than market comparisons and suggests there could be more upside ahead. But will real-world results live up to the theory?

Look into how the SWS DCF model arrives at its fair value.

Stay updated when valuation signals shift by adding Sandisk to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Sandisk Narrative

If you have a different view or enjoy diving deeper into the numbers, you can shape your own perspective in just a few minutes by using Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Sandisk.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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