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Sandisk shares fall after guidance, supported by long term deals
The company said its fiscal Q1 outlook missed consensus slightly, while it moved to lock in longer term pricing through five year contracts with revenue floor and financial guarantees.
Sandisk shares sank nearly 12% after the company reported fiscal fourth quarter results that beat expectations, then issued guidance for fiscal Q1 that came in just below consensus, according to Yahoo Finance. The outlet cited revenue that rose 372% year over year to $9.0 billion and adjusted earnings per share that jumped from $0.29 to $39.25, alongside gross margin expanding from 26.2% to 84.6% on stronger NAND flash memory prices.
Investors reacted to Sandisk's forecast, which projected fiscal Q1 revenue of $10.3 billion to $10.8 billion, near $10.55 billion at the midpoint versus a $10.62 billion consensus estimate. Yahoo Finance also pointed to a gross margin decline that the company expected to slip slightly sequentially.
Yahoo Finance said the lighter outlook reflected a decision by Sandisk to forgo some near term revenue and margin gains in order to secure more sustained growth via longer term five year agreements. The outlet added that Sandisk has eight contracts with revenue floor pricing totaling $93.9 billion and $16.5 billion in financial guarantees.
In the same piece, Yahoo Finance framed the post earnings drop as an opportunity for long term investors, noting Sandisk trades at a forward price to earnings ratio of 5.7 based on fiscal 2027 analyst estimates. The article also includes additional stocks, but the details provided here cover Sandisk's results and guidance.