On Thursday, KeyBanc Capital Markets adjusted its outlook on shares of Snowflake Inc . (NYSE: NYSE:SNOW), increasing the price target to $210 from the prior $185, while sustaining an Overweight rating on the company's shares. The revised price target reflects a valuation based on 14.2 times the forecasted fiscal year 2027 enterprise value to revenue, compared to its peers' average of 10.5 times.
The analyst highlighted Snowflake's current trading metrics, noting that at an intra-day price of $184.65, the company is trading at 14.9 times its projected fiscal year 2026 enterprise value to revenue and at 57.3 times its forecasted free cash flow for the same period. The new price target is anchored on expected revenue of $5,230 million by fiscal year 2027, with considerations of the company's growth rate and cash flow generation.
The report also outlined several risks that could potentially prevent Snowflake from reaching the new price target. These risks include heightened competition, particularly from public cloud vendors, and the possibility that Snowflake may not significantly benefit from the next generation of artificial intelligence, referred to as GenAI.
Moreover, concerns were raised about potential management turnover, the challenge of expanding beyond core data warehousing, continuous consumption headwinds, and the emergence of new architectures, such as Iceberg tables, which could impact storage revenue.
Despite these concerns, KeyBanc's updated price target suggests confidence in Snowflake's market position and growth prospects. The Overweight rating indicates that the analyst expects the stock to outperform the average return of the stocks that KeyBanc covers over the next 12 to 18 months.
Snowflake, known for its cloud-based data warehousing services, continues to be a notable player in the tech sector as it navigates a competitive and rapidly evolving market landscape.
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