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Snowflake Analyst Gives Stock Outperform Rating, But Cautions Near-Term Volatility

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Snowflake Analyst Gives Stock Outperform Rating, But Cautions Near-Term Volatility

Data cloud company Snowflake (NYSE: SNOW) stands out as one of the select few software companies that face a large growth opportunity, according to Evercore ISI.

The Snowflake Analyst: Kirk Materne initiated coverage of Snowflake's stock with an Outperform rating and $311 price target.

The Snowflake Thesis: Snowflake directly addresses the rapid growth and democratization of data within organizations, Materne wrote in the initiation note. Snowflake happens to be a market leader in the space, yet its market share of the $78 billion total addressable market (in 2024) stands at just 1.2%.

Snowflake has only 4,000 customers on its platform, which is a small fraction compared to a company like VMware, Inc. (NYSE: VMW) that boasts 500,000. As such, Snowflake is in the very early innings of a multi-year long growth trajectory so its revenue growth potential and margin expansion represent a "huge opportunity."

The research firm is estimating Snowflake can generate a 60% compounded annual growth rate through 2025.

However, investors should be cautioned that Snowflake is "not for the faint of heart" as shares are already trading at a premium on nearly every metric, the analyst wrote. Most notably, the stock is trading at 32 times 2022 EV/revenue so the bullish case will "play out over multiple years" and not just a few quarters.

SNOW Price Action: Shares of Snowflake were trading higher by around 5.24% Friday morning at $228.40.

(Photo: Zdenek Machacek via Unsplash)

Latest Ratings for SNOW

DateFirmActionFromTo
May 2021Goldman SachsUpgradesNeutralBuy
May 2021NeedhamInitiates Coverage OnHold
Mar 2021Evercore ISI GroupInitiates Coverage OnOutperform

View More Analyst Ratings for SNOW
View the Latest Analyst Ratings

 

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