SanDisk FQ3'26：极高平均售价（现已锁定）；上调盈利预测及目标价至1700美元，重申跑赢大盘（短期首选）

Mark C. Newman+1 212 845 7822mark.newman@bernsteinsg.com April Li+1 917 344 8339april.li@bernsteinsg.com Phoebe Sun+1 917 344 8481phoebe.sun@bernsteinsg.com Price Target Sandisk FQ3'26: Nosebleed ASPs (now locked in); Raise estimatesand TP to $1700, Reiterate Outperform (top ST pick) Sandisk reported FQ3’26 results yesterday after market close with a strong beat and guide.Stock was down 6% post market at time of writing on the back of +3,264% one year move. Sandisk delivered a broad-based beat in FQ3.Revenue was up 97% to $5.95bn (vs.consensus $4.72bn), driven by ASP up a whopping 140% QoQ while slightly offset by highteens bit shipment decline QoQ. The EPS of $23.41 beat us, consensus and our bull case. FQ4 EPS guidance is conservative and reflects new long-term agreements (LTAs).Thecompany guided FQ4 EPS of $30-33/share, above our estimate of $25.3 and consensus of$24.06. However, guidance implies a significant deceleration in ASP change to mid-to-highteens % QoQ. We think this is due to the LTAs locking in prices reducing short term upside inexchange for long term stability, some pull forward of ASP growth in FQ2, and conservatism. SanDisk has signed 5 LTAs in total— 3 in fiscal Q3 and 2 in Q4 — with active negotiationsunderway with additional customers. These account for over 1/3 of SanDisk's bits demandin FY2027, with duration up to 5 years. This shouldsignificantly reduce volatility in theprice going forward.In addition, management announced a new $6bn share repurchaseauthorization. Based on the strong earnings, strong guidance, company commentary and the very strongpricing environmentwe increase our estimates again substantially- mainly due tostronger pricing in the short-term. OurFY26 and FY27 EPS were increased to $64.73 and$200.47 (37% and 60% above consensus) respectively. Investment Implications Weincrease our target price to $1,700,stillbased on 11x our new 4-year through cycle(FY26-29) EPS. This implies 8.5x our FY27 EPS.Reiterate Outperform, top ST pick. DETAILS Sandisk reported FQ3’26 results yesterday after market close. Sandisk delivered a broad-based beat in FQ3. Revenue was up 97% to $5.95bn (vs. consensus $4.72bn), driven byASP up 140% QoQ while slightly offset by high teens bit shipment decline QoQ. The EPS of $23.41 beat consensusand our “Blue Sky” bull case scenario (Exhibit 2). •The company explained that thebit declineis primarily due to building inventory to support a strong QLC (high capacityNAND) rollout in Q4 and to prepare for the new LTAs. Bit shipments should return to growth in FQ4. •Theimpressive FQ3 ASP growthof 140% beat our Blue Sky Scenario of 75%. As a result,EPS came in at $23.41(vs.consensus at $14.51), even higher than our Blue Sky estimates of $17.47 outlined in our recent note:Sandisk: How high canestimates and the stock go? Raising estimates and TP to $1,250, with blue-sky scenario at $3000. FQ4 EPS guidance is conservative and reflects the new business model of LTAs (long term agreements).The companyguided FQ4 EPS of $30-33/share, above our estimate of $25.3 and consensus of $24.06 (but below our bull case of $40.53).However, guidance implies a significant deceleration in ASP change to mid-to-high teens % QoQ. We attribute this to threereasons: •First, some ASP growth has been pulled forward into FQ3 due to the new LTAs.SanDisk's 140% QoQ ASP growth inFQ3 significantly outperformed peers - Samsung and SK Hynix both saw smaller gains (Exhibit 1) - and we believe recently-signed LTAs are the key driver. Because these agreements lock in pricing upfront, SanDisk captured outsized ASP benefitsin FQ3 that would otherwise have accrued gradually, leaving less incremental pricing upside for FQ4. Management'sconservative FQ4 guide likely reflects this timing effect. •Second, and more importantly, we view the LTA shift as a net positive despite the near-term pricing moderation.LTAs trade some incremental pricing upside for committed demand and reduced cyclicality - securing attractive economicsover a longer horizon rather than maximizing any single quarter. In our view, durability of margins across the cycle is worthmore than a higher ASP print in one quarter, making the trade-off clearly favorable. •Thirdly, conservatism:Last quarter the company’s guidance for FQ3 implied 50-55% ASP increase and they actuallymanaged 140%. We believe that management is conservatively guiding as there is still a long way to go in the quarter. Management has provided meaningful detail on SanDisk’s multi-year supply partnerships, referred to as NewBusiness Models (NBMs). These NBMs were positioned as a fundamental reshaping of the business model, aimed atreducing historical NAND cyclicality while supporting more durable, structurally higher earnings. Management alsoemphasized improved revenue visibility, along with more consistent margins and returns over time. SanDisk has signed 5 multiyear partnerships in total — 3 in fiscal Q3 and 2 in Q4 — with active negotiations u