On Thursday, DA Davidson maintained its optimistic stance on Snowflake Inc . (NYSE:SNOW) shares, reiterating a Buy rating and a price target of $175.00. The affirmation comes even as the company's shares linger near their all-time low points. According to the firm, Snowflake continues to be a top-tier software entity, its current stock performance notwithstanding.
The analyst from DA Davidson highlighted that their updated evaluation of Snowflake is based on insights from discussions with Data Engineering and Networking (DEN) experts and an analysis of proprietary developer data. These sources suggest that Snowflake's core narrative remains intact despite recent setbacks that the analyst described as "self-inflicted wounds." These issues are seen as temporary distractions from the company's long-term potential.
Snowflake's enduring appeal, as per DA Davidson, is supported by enduring multi-year tailwinds that position the company as a long-term secular winner in its field. Despite the recent dip in share value, the firm's analysis indicates that the fundamental aspects that drive Snowflake's business have not altered.
The analyst's statement underscores the firm's strategy towards software investments, which favors a barbell approach. This approach involves investing in both high-growth potential stocks and more stable, established companies. Snowflake, with its compelling valuation at the current levels, fits into this strategy as an attractive investment opportunity.
DA Davidson's reiterated price target of $175.00 for Snowflake reflects confidence in the company's ability to overcome its current challenges and continue its trajectory as a leading software company. The firm's stance suggests that the present low share price may represent a buying opportunity for investors who share their long-term perspective on Snowflake's prospects.
In other recent news, Snowflake Inc. has been the focus of several significant financial developments. The cloud-based data-warehousing firm recently completed a substantial $2.3 billion convertible debt offering, a move viewed favorably by Rosenblatt Securities, Deutsche Bank, and Scotiabank. This milestone was accompanied by Snowflake's impressive 30% year-over-year increase in product revenue, reaching $829 million for its second quarter of fiscal year 2025.
This strong performance prompted Snowflake to raise its full-year product revenue outlook. Analysts from Rosenblatt, Deutsche Bank, and Morgan Stanley have all maintained their respective Buy and Equalweight ratings on Snowflake, indicating confidence in the company's financial strategy and future performance.
Notably, Rosenblatt and Deutsche Bank kept their price targets steady at $180, while Scotiabank reaffirmed its Sector Outperform rating with a price target of $165. The convertible debt offering and positive revenue growth are part of Snowflake's ongoing commitment to enhanced execution and quicker product innovation. The company plans to continue its aggressive share repurchase strategy while keeping options open for potential merger and acquisition opportunities.
InvestingPro Insights
While DA Davidson maintains a bullish outlook on Snowflake with a $175 price target, InvestingPro data offers additional context to the company's current position. Snowflake's market cap stands at $36.75 billion, with the stock trading near its 52-week low, as indicated by an InvestingPro Tip. This aligns with the article's mention of shares lingering near all-time lows.
Despite the optimistic analyst view, it is worth noting that Snowflake is not currently profitable, with a negative P/E ratio of -35.84. However, an InvestingPro Tip suggests that analysts predict the company will turn profitable this year, potentially supporting DA Davidson's long-term positive outlook.
The company's revenue growth remains strong at 31.21% over the last twelve months, with a gross profit margin of 67.83%. These figures lend credence to DA Davidson's characterization of Snowflake as a "top-tier software entity." For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into Snowflake's financial health and market position.
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