On Thursday, KeyBanc analyst Eric Heath revised the stock price target for Snowflake Inc . (NYSE: NYSE:SNOW) to $168 from the previous target of $200, while maintaining an Overweight rating on the stock. The adjustment follows KeyBanc's attendance at Snowflake's 2024 investor day and the accompanying Data Cloud Summit user conference earlier this week.
During the events, KeyBanc noted Snowflake's rapid product innovation and user-friendly platform, as well as a robust collaboration and development ecosystem. Discussions with customers about the recent Iceberg initiative were promising, although it is still too soon to determine the exact financial impact.
KeyBanc left the investor day with a positive outlook on Snowflake's potential for the year, especially with the upcoming Cortex product, which is expected to make a "meaningful contribution" in the fiscal year 2025, even though it is not yet factored into the current guidance.
Still, the analyst observed that the investor day presentations lacked customer testimonials focused on the adoption of new products, the company's strategic approach to enabling artificial intelligence (AI), or how Iceberg could lead to additional workloads for Snowflake. Moreover, KeyBanc expressed a desire for more clarity from management on why Snowflake should be the preferred platform for AI workloads.
The report also mentioned monitoring the competitive landscape, especially in light of Databricks' recent acquisition of Tabular and its upcoming Data + AI Summit next week. Despite these considerations and the reduction in peer multiples leading to the lower price target, KeyBanc's overall thesis on Snowflake remains unchanged.
They believe Snowflake is well-positioned in a large and growing total addressable market (TAM), with a comprehensive platform that appeals to business analysts, a strong pace of innovation under CEO Sridhar, and the potential to democratize AI for enterprises.
"In other recent news, Snowflake Inc. continues to garner attention from major financial firms. Goldman Sachs (NYSE:GS) maintains a Buy rating for Snowflake, emphasizing the company's potential as a key player in the Generation AI space.
Piper Sandler also holds an Overweight rating, citing positive feedback from large enterprise customers. However, Mizuho, RBC (TSX:RY) Capital Markets, and Barclays (LON:BARC) have adjusted their price targets for Snowflake, reflecting new product updates, partnerships, and market trends.
Snowflake has introduced a suite of AI development tools and launched Polaris (NYSE:PII) Catalog, an open catalog for Apache (NASDAQ:APA) Iceberg, marking significant strides in product innovation. These developments are part of the company's strategic positioning within the data cloud market.
Analysts, including those from Goldman Sachs and Piper Sandler, express confidence in the company's direction, commending the new CEO, Sridhar Ramaswamy, for accelerating product innovation and focusing on data interoperability.
These recent developments underscore Snowflake's commitment to growth and innovation. Despite potential near-term execution risks, analysts continue to express confidence in the company's direction and its ability to capitalize on a total addressable market estimated to exceed $150 billion by 2028."
InvestingPro Insights
Following KeyBanc's recent analysis of Snowflake Inc. (NYSE: SNOW), InvestingPro's real-time data and insights offer additional context for investors. Snowflake's market capitalization stands at $44.46 billion, reflecting its significant presence in the data warehousing space.
Notably, the company's revenue has seen a healthy growth of 32.85% in the last twelve months as of Q1 2023, indicating a strong demand for its cloud-based services. Despite a challenging market, Snowflake's gross profit margin remains high at 68.07%, underscoring its ability to maintain profitability in core operations.
InvestingPro Tips highlight that Snowflake is currently trading near its 52-week low, which could represent a potential entry point for investors considering the company's strong fundamentals, such as holding more cash than debt and having liquid assets that exceed short-term obligations.
Moreover, while the stock has faced downward revisions from analysts for the upcoming period, it is also predicted to become profitable this year. For those looking to dive deeper into Snowflake's financials and future outlook, InvestingPro offers even more insights; there are 10 additional tips available on their platform. Investors interested in these comprehensive analytics can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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