The past year has been a tremendous one for Sandisk (SNDK -0.92%), as it has rallied an incredible 1,200%. But at $250 billion in market cap, it's still not among the top tech companies in the world in terms of valuation.
Sandisk's stock has been taking a breather in recent months as it's down around 27% from the high of $2,354 that it hit earlier this year. With a reduced valuation and plenty of growth opportunities due to the ongoing memory shortage, could the tech stock double in value within the next 12 months?
Image source: Getty Images.
Analysts still see plenty of upside for the stock
While there may be less excitement around Sandisk's stock these days, analysts remain optimistic that it can go higher in the near term. Of 28 analyst ratings, 24 rate the stock a buy (the others are just 'hold'). The consensus analyst price target for Micron is just under $2,114, which implies an upside of around 24% from where it's trading right now.
Analyst price targets reflect expectations about where analysts think the stock will go in the short term, typically over the next 12 to 18 months. While a 24% gain is encouraging, the consensus suggests the stock isn't likely to double within the next 12 months.
However, if the company's upcoming earnings report features a rosy outlook and a significant upgrade to its guidance, analysts could very well raise their price targets for the stock.
NASDAQ: SNDK
Key Data Points
The stock may seem cheap, but I don't think it'll double
Sandisk has achieved impressive growth in recent quarters, and so the stock is trading modestly related to earnings -- its price-to-earnings (P/E) multiple is 23, which is in line with what the S&P 500 average is. But with Sandisk, its growth potential is massive, and thus, it may warrant a higher multiple. Based on its projected future profits, its forward P/E multiple is just eight.
However, investors don't appear willing to pay more for the stock due to uncertainty about how long the memory shortage will last. Once it ends, demand could slow significantly, and prices may also come down. Sandisk and other memory stocks could be vulnerable to significant declines.
Given the uncertainty, investors may thus not be as willing to price Sandisk's stock much higher than where it is right now. While it may still rise in value, particularly if its earnings results and guidance remain promising, I don't think it'll double in value within the next 12 months.
