On Thursday, Citi reaffirmed its Buy rating for Snowflake Inc . (NYSE: NYSE:SNOW) shares with a consistent price target of $200.00. The endorsement comes after attending Snowflake's AI World Tour event on Tuesday, where the company showcased its AI Data Cloud services and educated attendees on new offerings such as Cortex AI, Dynamic Tables, Iceberg, and Polaris (NYSE:PII) Catalog.
Keynotes were delivered by Snowflake's CPO Christian Kleinerman and CMO Denise Persson, emphasizing the company's latest developments.
The event did not feature any significant new product announcements but focused on highlighting the advancements and capabilities of Snowflake's current suite of services. Citi's analyst noted that the sessions were well-attended and provided an opportunity to engage with over ten customers and partners to gauge their reactions and feedback.
Feedback from the event presented a mixed picture, with positive responses centering on the enthusiasm for newly generally available products like Cortex AI, Polaris, and Iceberg. These offerings, particularly in the financial services sector, have seen some strong usage upticks. However, the overall impact of these new products on the company's performance is still considered to be in the early stages and not yet substantial.
Conversely, partners at the event expressed concerns regarding budget constraints and cost issues, which continue to be a trend in optimization efforts. Despite these challenges, the overall sentiment from partners and customers regarding Snowflake's direction and product line remains optimistic, suggesting potential for growth as these products mature and gain wider adoption in the market.
In other recent news, Snowflake Inc. has made significant strides in its financial performance. The company recently completed a substantial $2.3 billion convertible debt offering, which was favorably received by analyst firms such as TD Cowen, Stifel, Rosenblatt Securities, Deutsche Bank, and Scotiabank.
This financial milestone was accompanied by 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. Analyst firms including DA Davidson, Rosenblatt Securities, Deutsche Bank, and Scotiabank have maintained their Buy ratings on Snowflake, while Morgan Stanley reiterated its Equalweight rating. The price targets set by these firms range from $165 to $180, reflecting their confidence in Snowflake's financial strategy and future performance.
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
Snowflake's recent AI World Tour event, which showcased its AI Data Cloud services, aligns with the company's ambitious growth trajectory. According to InvestingPro data, Snowflake's revenue growth stands at an impressive 31.21% over the last twelve months, reflecting the company's strong market position in cloud data services. This growth is particularly noteworthy given the current economic climate and the budget constraints mentioned by partners at the event.
Despite the robust revenue growth, InvestingPro Tips highlight that Snowflake is not currently profitable over the last twelve months, with an operating income margin of -38.89%. This aligns with the company's focus on expansion and product development, as evidenced by the introduction of new offerings like Cortex AI and Polaris Catalog.
Interestingly, an InvestingPro Tip reveals that management has been aggressively buying back shares, which could signal confidence in the company's long-term prospects despite current profitability challenges. This strategy, combined with Citi's maintained Buy rating and $200 price target, suggests a positive outlook for Snowflake's future performance.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Snowflake, providing deeper insights into the company's financial health and market position.
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