On Thursday, Snowflake Inc . (NYSE:SNOW) saw its price target increased by DA Davidson from $175.00 to $200.00, with the firm maintaining a Buy rating on the stock.
This adjustment follows Snowflake's robust third-quarter earnings for fiscal year 2025, which showcased strong product revenue growth and increasing profitability.
The company's management provided insights that align with pre-earnings observations, including momentum from Snowpark and the rapid adoption of Snowflake's latest artificial intelligence and machine learning products. These products are now on par with those offered by competitor Databricks.
The analyst's statement highlighted that the positive earnings results were anticipated based on proprietary developer data and discussions with The DEN, a collaborative industry group. These conversations revealed an upward trend in the use of Snowflake's offerings, which contributed to the analyst's confidence in the company's performance.
According to the analyst, the improvements in Snowflake's products are also reflected in the easing of previous market challenges. The headwinds associated with Iceberg, a technical aspect of Snowflake's platform, are diminishing.
Additionally, changes in the company's go-to-market strategy are beginning to have a beneficial impact, which was noted to be occurring sooner than originally expected by the analyst.
Snowflake's continued growth and the positive adjustments in its market strategy and product offerings suggest a solidifying position within the competitive landscape of cloud-based data platforms. The increased price target to $200.00 from $175.00 by DA Davidson underscores the firm's confidence in Snowflake's trajectory and market potential.
The stock's performance and future outlook will be closely watched by investors as the company navigates the evolving demands of the data management and analytics sector. Snowflake's ability to maintain its growth amid these changes will be critical to its ongoing success and valuation.
In other recent news, Snowflake Inc. has reported strong fiscal third-quarter results, with product revenue reaching $900 million, marking a 29% year-over-year increase. The company's remaining performance obligations also saw a significant 55% year-over-year acceleration, totaling $5.7 billion. Snowflake's non-GAAP operating margin improved to 6%, and the company has raised its full-year product revenue guidance to approximately $3.43 billion.
Analysts from Goldman Sachs (NYSE:GS), BTIG, and Evercore ISI have all recently commented on Snowflake's performance. Goldman Sachs maintained its Conviction Buy rating, citing the company's ability to sustain mid-20s percentage revenue growth.
BTIG maintained a Neutral stance, seeking more evidence of stabilization and momentum with new product initiatives. Evercore ISI raised the price target to $190 from the previous $170 while maintaining an Outperform rating, noting the company's recent quarterly performance which exceeded expectations.
Recent developments for Snowflake include the acquisition of DataVolo, set to enhance data connectivity and engineering capabilities, and a partnership with Anthropic to integrate powerful AI models into the Snowflake Cortex. The company's focus on cost efficiency and innovation in data engineering and AI technologies continues to drive its growth.
InvestingPro Insights
Snowflake's recent performance and analyst optimism are reflected in some key financial metrics from InvestingPro. The company's revenue growth remains strong, with a 31.21% increase over the last twelve months, reaching $3.21 billion. This aligns with the robust product revenue growth mentioned in the article.
Despite the positive revenue trend, InvestingPro data shows that Snowflake is not yet profitable, with a negative operating income margin of -38.89%. However, an InvestingPro Tip suggests that analysts predict the company will be profitable this year, which could be a turning point for Snowflake's financial performance.
Another InvestingPro Tip indicates that Snowflake holds more cash than debt on its balance sheet, potentially providing financial flexibility as it continues to invest in product development and market expansion. This strong cash position could be particularly important as the company scales its AI and machine learning offerings.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Snowflake, providing deeper insights into the company's financial health and market position.
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