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Investing.com -- Citi Research has begun coverage of SanDisk Corporation (NASDAQ:SNDK) with a Buy rating and a $57 price target, which implies roughly 21% upside from the stock’s Wednesday closing price.
The company’s shares advanced more than 3% in premarket trading Thursday.
The bank’s analysts forecast improving NAND supply and demand dynamics in the second half of 2025 and a pricing inflection that could support the company’s move deeper into the enterprise SSD (eSSD) market.
They also expect a favorable backdrop through 2026, supported by “durable, strong underlying data center demand plus stable-to-favorable supply/demand conditions.”
Citi highlights Sandisk’s competitive position through its Bics8 technology, currently being qualified by major cloud providers.
While the company already holds 25% of the client SSD market, it has less than 5% of the enterprise SSD segment, where it aims to grow.
Its Cloud segment sales have already surged 380% year-over-year, and management expects the share of eSSD in total flash bits to grow from 12% to 40–50% over time.
Valuation also appears favorable relative to peers. Sandisk trades at 0.7x Price-to-Book Value Ratio (P/BV) and 7.2x price-to-earnings (P/E), well below peers with DRAM exposure and below Japan’s Kioxia, which is DRAM-free and trades at 1.6x P/BV and 8.6x P/E.
The Wall Street giant believes Sandisk’s stake in its Kioxia joint venture, which holds $15–20 billion in invested capital, is not fully reflected in its current valuation.
Citi memory analyst Peter Lee expects the NAND industry supply/demand balance to tighten starting in Q3 2025 and to remain tight into mid-2027. This view underpins broader optimism across the sector, despite lingering concerns over tariff risks and Chinese competition.
“We do remain mindful of the potential for foreign competition and macro dynamics/tariff pull-ins, which could weigh on overall demand, paired with the highly cyclical nature of and volatile pricing in the NAND industry,” analysts noted.
Citi highlighted several risks to its Sandisk thesis, including ongoing pricing volatility, technology transition challenges, and demand sensitivity in consumer devices and PCs.