On Tuesday, Stifel reaffirmed its Buy rating and $168.00 price target for Snowflake Inc . (NYSE: NYSE:SNOW), a cloud-based data warehousing company. After attending Snowflake's New York City World Tour, the firm's analyst reported positive feedback from partners and customers about their business and use of Snowflake's services. The discussions at the event indicated that Snowflake and its competitor Databricks continue to excel in their respective market segments without any significant wallet share shift between them, suggesting a potential for both companies to coexist in the market.
The analyst highlighted several key takeaways from the event, including strong interest in Snowflake's general AI and advanced AI/ML offerings from organizations of various sizes. This interest was particularly noted in accounts where Databricks is not present. However, the adoption of Iceberg tables has been mixed, and there were some cautious remarks regarding the macroeconomic environment.
Despite these mixed signals, the conversations at the event reinforced the analyst's view 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.
The analyst's outlook for Snowflake remains positive, based on the company's performance within its market segments and the potential for continued growth driven by its product offerings. The sustained Buy rating and price target reflect the firm's confidence in Snowflake's ability to maintain its growth trajectory and market position.
In other recent news, Snowflake Inc. has been making significant strides in its financial performance and market strategy. The data warehousing company recently completed a substantial $2.3 billion convertible debt offering, which was positively received by analyst firms such as TD Cowen, 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.
InvestingPro Insights
Recent data from InvestingPro provides additional context to Stifel's positive outlook on Snowflake (NYSE: SNOW). The company's revenue growth remains strong, with a 31.21% increase over the last twelve months, aligning with the analyst's expectation of sustained mid-20% revenue growth. This robust growth is particularly impressive given Snowflake's substantial market capitalization of $39.91 billion.
InvestingPro Tips highlight that Snowflake holds more cash than debt on its balance sheet, which could provide financial flexibility as the company continues to invest in AI and ML offerings. However, it's worth noting that Snowflake is not currently profitable, with a negative P/E ratio of -38.4. This aligns with the company's focus on growth over immediate profitability, a common strategy in the high-growth tech sector.
Interestingly, analysts predict that Snowflake will become profitable this year, which could be a significant milestone for the company and potentially impact its valuation. Currently, Snowflake is trading at a high revenue valuation multiple, reflecting investor optimism about its future prospects.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights. In fact, there are 6 more InvestingPro Tips available for Snowflake, which could provide valuable information for those considering an investment in the company.
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