On Monday (NASDAQ:MNDY), KeyBanc Capital Markets adjusted its outlook on shares of Snowflake Inc . (NYSE: NYSE:SNOW), reducing the price target to $150 from the previous $168 while retaining an Overweight rating on the stock. The adjustment follows a comprehensive survey of 15 Snowflake partners and customers, which provided insights into their spending intentions, product engagement, and competitive landscape.
The survey revealed a mixed sentiment among Snowflake's clientele. On the positive side, Snowflake is perceived as increasingly strategic, holding a position of similar importance as rival Databricks. High adoption and interest were noted for several of Snowflake's new products, particularly those related to GenAI use cases. Moreover, all surveyed partners reported meeting or exceeding their plans for the third fiscal quarter.
However, the survey also highlighted some concerns. On average, customers projected only a 10% increase in their spending with Snowflake over the next twelve months. While Iceberg's introduction is seen as beneficial to Snowflake's workload capabilities, some plans indicate a shift to move data away from the platform.
Furthermore, a significant portion of Snowflake's expenditures is dedicated to Extract, Transform, Load (ETL) processes, and while there remains potential for further migrations from on-premise data warehouses, this transition is approximately two-thirds complete.
In light of these findings, KeyBanc has modestly lowered its fiscal year 2026 estimates for Snowflake. The revision takes into account potential near-term challenges to revenue from storage and ETL services due to the adoption of Iceberg. Despite these adjustments, KeyBanc remains optimistic about Snowflake's ability to increase workload adoption in the mid-term.
In other recent news, Snowflake Inc. has seen several noteworthy developments. Analyst firm Monness Crespi Hardt has upgraded Snowflake from Neutral to Buy, setting a new price target of $140.00. This upgrade comes after a challenging year for Snowflake, with the firm seeing the current valuation as an opportunity. Truist Securities, Citi, Stifel, and TD Cowen have also maintained their Buy ratings, with price targets ranging from $165 to $210.
Snowflake recently completed a significant $2.3 billion convertible debt offering and reported a robust 30% year-over-year increase in product revenue, reaching $829 million for its second quarter of fiscal year 2025. Following this strong performance, Snowflake raised its full-year product revenue outlook.
These recent developments suggest that Snowflake's core SQL business is expected to maintain a growth rate of over 20%. Furthermore, the potential for new products to contribute to growth as they mature supports the anticipation that Snowflake could sustain mid-20% revenue growth in the upcoming years. These are the latest developments in Snowflake's ongoing commitment to improved execution and quicker product innovation.
InvestingPro Insights
To complement KeyBanc's analysis, recent data from InvestingPro offers additional context on Snowflake's financial position. The company's market capitalization stands at $40.87 billion, reflecting its significant presence in the data cloud sector. Snowflake's revenue growth remains robust, with a 31.21% increase over the last twelve months, aligning with the strategic importance noted in KeyBanc's survey.
However, profitability remains a challenge for Snowflake. An InvestingPro Tip highlights that the company is not profitable over the last twelve months, with a negative P/E ratio of -39.62. This aligns with the operational adjustments and market positioning efforts described in the article.
Another InvestingPro Tip indicates that Snowflake holds more cash than debt on its balance sheet, which could provide financial flexibility as the company navigates the competitive landscape and invests in new products, particularly those related to GenAI use cases mentioned in the survey.
For investors seeking a more comprehensive analysis, InvestingPro offers 6 additional tips for Snowflake, providing a deeper understanding of the company's financial health and market position.
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