Goldman Sachs Quick Comment on SanDisk's Quarterly Report: Performance Exceeded "Already Very High" Expectations

Goldman Sachs stated not to be blinded by previous concerns—SanDisk not only surpassed the high market thresholds but also directly crushed all expectations.

On January 30th, according to the news from the Wind Trading Desk, Goldman Sachs in its latest research report stated that despite SanDisk's stock price experiencing a significant increase recently due to NVIDIA's announcement of storage controllers, industry supply-demand tightness, and strong price expectations, the company's results were still astonishing.

Goldman Sachs believes that both the recently concluded fourth quarter and the guidance for the upcoming first quarter show data that is not just "better than expected," but far above Wall Street consensus.

Goldman Sachs analysts noted that SanDisk's fourth-quarter revenue reached $3.03 billion, exceeding both Goldman Sachs' and market consensus expectations; even more remarkable was the gross margin reaching 51.1%, far surpassing Goldman Sachs' 43.0% and the market's 42.3% expectations.

The report stated that although Goldman Sachs maintained a target price of $320 and a buy rating, the current stock price is nearly $540, which is 40% higher than the target price, indicating that the market's pricing of the tight supply-demand situation in the NAND storage industry has become very aggressive.

Goldman Sachs stated, however, that the guidance provided by the company for the first quarter is even more astonishing—expected median revenue of $4.6 billion, which is 53.3% higher than market expectations, a gross margin guidance of 66.0%, and a median earnings per share guidance of $13.00, nearly 2.4 times the market expectation.

Goldman Sachs believes that this data indicates that the NAND storage industry may be experiencing a cycle of exceeding expectations, which could have a positive spillover effect on similar companies like Micron Technology.

Fourth Quarter Performance: Not Just a Beat, But a Crush

The report stated that the market originally expected SanDisk to deliver a decent performance, but the actual results showed that Wall Street's analytical models completely underestimated the company's profitability.

• Revenue: SanDisk's revenue was $3.03 billion. In contrast, Goldman Sachs had previously predicted $2.7 billion, while Wall Street (Visible Alpha consensus) predicted only $2.69 billion.
• Gross Margin: This is one of the most astonishing parts. The actual gross margin soared to 51.1%, far exceeding Goldman Sachs' forecast of 43.0% and Wall Street's expectation of 42.3%.
• Earnings Per Share (Non-GAAP EPS): Ultimately recorded at $6.20. This figure not only beat expectations but practically mocked them—Goldman Sachs predicted $3.66, and Wall Street expected $3.55. The actual performance was nearly double the market expectation.

First Quarter Guidance: Disruptive Growth Expectations

Goldman Sachs stated that if the Q4 performance is "in the past," then the Q1 guidance provided by the company has directly ignited investor sentiment. The management's outlook shows that the tightness of NAND supply and pricing power is translating into massive profits

• Revenue Guidance: The company expects a Q1 revenue midpoint of $4.6 billion. Goldman Sachs previously predicted $2.62 billion, while Wall Street's expectation was $3.0 billion, indicating guidance is over 50% higher than market consensus.
• Gross Margin Guidance: Expected to further rise to 66.0%. Goldman Sachs predicted 44.0%, and Wall Street's expectation was 47.2%. This suggests extremely strong pricing power.
• Earnings Per Share Guidance (EPS Guidance): The company provided a range of $12.00 to $14.00, with a midpoint of $13.00.

Goldman Sachs previously predicted only $3.48, while Wall Street's expectation was $5.42. The midpoint of the guidance is 140% higher than Wall Street's expectation and 273% higher than Goldman Sachs' own prediction.

Goldman Sachs analysts pointed out that the significant increase in investor expectations is mainly due to the recent surge in stock prices, tight industry supply and demand, and NVIDIA's actions in the storage sector. The firm clearly stated that Micron Technology is expected to respond positively due to similar exposure in the end market.

As a major supplier of NAND and DRAM memory chips, Micron Technology faces a similar industry supply and demand environment. SanDisk's better-than-expected performance may indicate that the entire memory chip industry is in a strong upward cycle