Snowflake Analysts Remain Bullish Post Q3 Results Amid Volatility

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  • Needham analyst Mike Cikos reiterated a Buy on Snowflake Inc SNOW and reduced the price target from $240 to $165.
  • Snowflake demonstrated strong growth in Q3, with product revenue growing 67% Y/Y while revenue upside flowed through to operating profit and adjusted free cash flow
  • However, the company provided Q4 guidance below Street expectations, notably calling out deteriorating trends in the APAC and SMB segments. 
  • Furthermore, he believes preliminary FY24 product revenue comments suggesting 47% growth confuse investors as the outlook appears aggressive to him.
  • He appreciates the FY24 guidepost, but it does nothing to de-risk numbers.
  • Mizuho analyst Gregg Moskowitz reiterated a Buy with a $185 price target.
  • SNOW reported an excellent overall Q3. However, Q4 product revenue guidance was weaker than expected. 
  • That said, SNOW has more recently seen some signs of improvement. More broadly, he maintained that SNOW's core offerings remain substantially differentiated. 
  • While an increased focus on cost optimization by macro-sensitive customers is likely, he believes that fundamentals at SNOW generally remain healthy, and he sees a material longer-term upside to the stock price.
  • Raymond James analyst Simon Leopold maintained Outperform and reduced the price target from $197 to $180.
  • Despite the revised guidance driven by macro headwinds, the stock's pullback over the last several months implies that investors had anticipated slowing consumption. 
  • In a normalized environment, he believes Snowflake's modest share, strong competitive position, and secular tailwinds from cloud adoption provide a compelling fundamental growth story for investors who can tolerate the volatility. 
  • The price target reflects the reduced revenue outlook.
  • Price Action: SNOW shares traded higher by 6.32% at $151.98 on the last check Thursday.
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