Goldman Sachs Quick Comment on SanDisk's Quarterly Report: Results exceeded the "already very high" expectations

Goldman Sachs Quick Comment on SanDisk's Quarterly Report: Results exceeded the "already very high" expectations

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Goldman Sachs says, don’t let past worries blind your eyes — SanDisk has not only surpassed the high market bar, but has smashed all expectations.

On January 30, according to the Chase Wind Trading Desk, Goldman Sachs stated in its latest research report that although SanDisk’s stock price has recently risen sharply, driven by Nvidia’s storage controller announcement, tight industry supply and demand, and strong price expectations, setting an extremely high bar for this earnings report, the company’s performance was still astonishing.

Goldman Sachs believes, whether it’s just-finished Q4 or the Q1 guidance, the figures are not just “above expectations,” but far above Wall Street consensus.

Goldman analysts noted that SanDisk’s Q4 revenue reached $3.03 billion, higher than both Goldman and market consensus; even more striking, its gross margin hit 51.1%, far exceeding Goldman’s 43.0% and the market’s 42.3% expectations.

The report states that despite Goldman Sachs maintaining a $320 target price and Buy rating, the current stock price is near $540, a 40% premium above the target, showing the market is already extremely aggressive in pricing for the tight supply-demand situation in the NAND storage industry.

Goldman Sachs says, however, the guidance for Q1 is even more shocking — median expected revenue at $4.6 billion, 53.3% higher than market expectations; gross margin guidance at 66.0%; median EPS guidance at $13.00, nearly 2.4 times market expectations.

Goldman Sachs believes these numbers indicate that the NAND storage industry may be experiencing an unprecedented boom cycle, which could have a positive spillover effect on peer companies like Micron Technology.

Q4 Actuals: Not just a Beat, but a Crush

The report says the market originally expected SanDisk to deliver a decent report card, but the actual results show Wall Street’s analysis models greatly underestimated the company’s earning capacity.

  • Revenue: SanDisk revenue was $3.03 billion. By comparison, Goldman Sachs previously forecast $2.70 billion, while the Wall Street (Visible Alpha consensus) forecast was only $2.69 billion.
  • Gross Margin: This is one of the most astonishing parts. Actual gross margin soared to 51.1%, far above Goldman’s forecast of 43.0% and Wall Street’s 42.3%.
  • Non-GAAP EPS: Actual EPS was $6.20. Not only did this beat expectations, it mockingly surpassed them — Goldman forecast $3.66, Wall Street $3.55; the actual result nearly doubled market expectations.

Q1 Guidance: Disruptive Growth Expectations

Goldman says that if Q4 results are about the “past,” then the Q1 guidance given by management is a direct blast to investor sentiment. Management’s outlook shows that the tight NAND supply and pricing power is translating into massive profits.

  • Revenue Guidance: The company expects Q1 median revenue at $4.60 billion. Goldman previously forecast $2.62 billion, Wall Street $3.00 billion; guidance is more than 50% higher than consensus.
  • Gross Margin Guidance: Expected to climb further to 66.0%. Goldman forecast was 44.0%, Wall Street’s was 47.2% — indicating extremely strong pricing power.
  • EPS Guidance: The guidance is $12.00-$14.00, with the median at $13.00.

Goldman’s prior estimate was only $3.48, Wall Street $5.42. The mid-point guidance is 140% above Wall Street expectations, 273% above Goldman’s own expectations.

Goldman analysts pointed out that the main reason for the sharp rise in investor expectation is the recent stock surge, industry supply-demand tightness, and Nvidia’s moves in storage. The bank clearly stated that Micron Technology is also likely to react positively due to similar end-market exposure.

As a major supplier of NAND and DRAM storage chips, Micron Technology faces similar industry supply-demand environment. SanDisk’s outperformance may signal that the entire memory chip sector is in a strong upcycle.

 

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The above highlights are from Chase Wind Trading Desk.

For more in-depth interpretations, including live analysis and frontline research, please join the 【Chase Wind Trading Desk ▪ Annual Membership】

Risk Reminder and DisclaimerThe market involves risks; please be cautious in investment. This article does not constitute personal investment advice and does not take into account the particular investment goals, financial situation, or needs of any individual user. Users should consider whether any views or conclusions herein suit their own circumstances. Investment based on this information is at your own risk.

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