Sandisk shareholders didn't love the flash-memory company's guidance. But at least one element of their disquiet -- its apparently peaking margins -- shouldn't be a worry.

Sandisk shares were down 3.7% at $1,306 on Thursday after the company's earnings beat expectations, but its forecast came in below Wall Street's expectations.

One of the factors that could be causing concern is that Sandisk projected its gross margin for the September quarter would be 83-85%, which at the midpoint would be down from 84.6% in the June quarter. That comes as the company locks in its new business model (NBM) agreements, which lock in customers at prices over the longer term.

Sandisk's move is in line with those of peers such as Micron Technology, and the same logic applies. While the company might be giving up a certain amount of profit now, it should be locking in bigger earnings over the longer term, potentially convincing the market it deserves a higher price-to-earnings multiple.

Sandisk, along with other memory companies, normally trades at a notably low forward price-to-earnings ratio because the memory-chip industry goes through cycles of boom and bust. Currently, it trades at a forward P/E multiple of just 6.04 times, according to FactSet.

However, Raymond James analyst Melissa Fairbanks argues that Sandisk deserves at least a 8.0 times multiple on her forecasts for its fiscal 2028 earnings. She raised her target price on the stock to $2,000 from $1,470 in a research note Thursday, reiterating an Outperform rating.

"Sandisk continues to benefit from accelerating AI-driven datacenter demand, while the rapid adoption of its new business model (NBMs) is materially improving earnings visibility, pricing discipline, and margin durability," wrote Fairbanks. "We suspect the economics of NBM remain robust, with floor pricing supporting gross margins of 80%."