Sandisk rises in premarket after earnings beat as investors reassess margin concerns

Sandisk Corporation shares rose 3.53% to $1302.96 in Friday premarket trading as broader risk appetite improved and investors bought a pullback that followed the company's post-earnings decline. The rebound came after Sandisk reported quarterly earnings of $39.25 per share, beating the analyst consensus estimate of $34.45 by 13.9%, while revenue climbed to $8.97 billion from $1.9 billion a year earlier and exceeded the $8.39 billion consensus forecast. The earlier selloff reflected concern over whether Sandisk can sustain elevated profit margins as the memory market changes, even as its underlying financial performance outpaced expectations. Chief Executive Officer David Goeckeler told Reuters the company has shifted sales toward long-term purchase agreements rather than quarterly deals, with those contracts now carrying a median duration of four years. Sandisk said it has eight agreements with six customers worth at least $93.9 billion and expects half of fiscal 2027 production and two-thirds of fiscal 2028 output to be sold under those deals. The company also said it signed five additional agreements since April under its new business model, including three with new customers and two expansions of existing deals. Its board approved an additional $14 billion share repurchase program, lifting remaining buyback authorization to $15.5 billion. The stock trades at about 17.1 times earnings, while the analyst consensus rating remains Buy with an average price forecast of $2,114.77. Citigroup maintained its Buy rating and lowered its price forecast to $2,100 on Aug. 6, RBC Capital maintained its Sector Perform rating and raised its price forecast to $1,300, and Wells Fargo maintained its Equal-Weight rating and lowered its price forecast to $1,400. Technically, Sandisk remains in a long-term uptrend despite a recent correction. The stock is about 49% above its 200-day simple moving average, but 9% below its 20-day SMA and nearly 24% below its 50-day SMA. MACD remains above its signal line, suggesting selling pressure has eased, while support is seen around $1,277.50. Sandisk is also a meaningful holding in several exchange-traded funds, including QYLD, RPG and FPX, meaning fund flows could influence trading activity in the shares.