It’s been over a year since memory and storage company Sandisk (NASDAQ: SNDK) spun off from Western Digital. And investors who have bought the stock, which focuses on flash memory storage, have enjoyed fantastic gains. If you were to invest just $1,000 into the stock a year ago, your investment would be worth more than $13,000 today, with its returns up over 1,200%.
Sandisk has easily been one of the top tech stocks to own during the past year. Business has been booming due to strong growth for its products, and it now has a market cap of around $110 billion. But with the stock rallying so much so quickly, is it too late to invest in Sandisk, or can it still go higher?
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A good way to gauge a stock’s upside is to look at analyst price targets. While a stock is by no means a guarantee of hitting the consensus average, it can be a good indication of how much bullishness remains. These are, after all, people who cover the stock regularly.
Currently, the consensus price target for SanDisk is around $570, which implies the stock could fall by about 23%. However, many analysts have also been raising their price targets recently, which often happens as a company does well and its financials look strong. And over the past couple of months, multiple analysts have set price targets of more than $800, with one as high as $1,000. There does look to be some upside that may be left for Sandisk, but that’s only among the most bullish of analysts.
Sandisk’s stock trades at 19 times its estimated future earnings (also based on analyst expectations), which may not seem all that expensive. But here again, if the business doesn’t perform as well as expected and signs emerge that demand is slowing, that could be a problem for the stock.
Sandisk stock has performed exceptionally well during the past 12 months, but I’d be hesitant to invest in it today. A lot of its future gains will depend on how much more growth investors still expect from the business. Right now, there’s already plenty of optimism priced into the stock, as is evident in its impressive performance.
The danger is that expectations may already be fairly high for the company, and if there’s any hint of demand slowing down, that could be risky for this scorching-hot stock. With so much speculation and excitement fueling the stock these days, I’d take more of a wait-and-see approach with Sandisk, as it may be approaching a peak.
