KeyBanc maintained a positive outlook on Snowflake Inc . (NYSE: NYSE:SNOW), reiterating an Overweight rating and a $168.00 price target. The firm's stance comes after Snowflake's second-quarter product revenue slightly exceeded expectations by $18 million, a 2.2% beat, and the company's full-year 2025 product revenue guidance was increased by $56 million.
Snowflake's earnings before interest and taxes (EBIT) and free cash flow (FCF) margins for the second quarter surpassed estimates by two percentage points. Despite these strong results, the guidance for FY25 margins for both EBIT and FCF was kept unchanged. A significant highlight was the reported remaining performance obligations (RPO), which outperformed consensus by $275 million and showed a year-over-year acceleration to 48% from 46% in the previous quarter, including two deals worth over $100 million each.
The company's recent product developments received positive remarks, suggesting that Snowpark is progressing as anticipated, and Cortex could potentially contribute to the second half of the fiscal year. Moreover, the early stages of the iceberg product are seen as driving additional workloads without affecting storage revenue.
KeyBanc acknowledged that despite these positive developments, the provided commentary and the flat net new product revenue growth year-over-year (excluding the leap day) might not fully address the concerns of long-term bears.
The estimated total addressable market (TAM) for Snowflake is approximately $350 billion. The price target of $168 remains unchanged based on these projections.
Snowflake Inc. has been the focus of various financial analyst firms following the release of its second-quarter results. The company reported a 30% growth in product revenue, reaching $829 million, leading to an upward revision of its fiscal year 2025 product revenue guidance to $3.356 billion. Despite this positive outcome, several analyst firms, including Scotiabank, TD Cowen, Rosenblatt, and Piper Sandler, adjusted their price targets for Snowflake while maintaining positive ratings.
The company's remaining performance obligations (RPO) also saw a significant increase, climbing to $5.2 billion, a 48% rise.
TD Cowen emphasized the significance of the full-year guidance raise, while Rosenblatt adjusted the price target to $180 from the previous $195. Piper Sandler maintained an Overweight rating and a price target of $165.
InvestingPro Insights
As Snowflake Inc. (NYSE: SNOW) continues to innovate and capture market share within the cloud computing space, a closer look at some key financial metrics and expert tips from InvestingPro can provide investors with additional context. Snowflake's impressive growth trajectory is reflected in its revenue growth, which has surged by 32.85% over the last twelve months as of Q1 2023.
One InvestingPro Tip that stands out is Snowflake's ability to hold more cash than debt on its balance sheet, which is an indicator of the company's strong financial position and its capacity to fund future growth initiatives. Additionally, Snowflake's liquid assets exceed its short-term obligations, further underlining the company's financial stability.
From a valuation standpoint, Snowflake's Price/Book ratio stands at 9.92, and while the company is not yet profitable, with a P/E ratio of -47.96, analysts predict profitability this year, suggesting a potential turning point for the company's financial performance. It is worth noting that Snowflake's stock has experienced significant volatility, with a six-month price total return of -40.14%, which could present an opportunity for investors with a long-term perspective.
For those interested in more in-depth analysis and additional InvestingPro Tips, there are 7 more tips available on the InvestingPro platform. Snowflake's next earnings date is slated for August 21, 2024, a key event that investors will be watching closely. The company's fair value is currently estimated at $135.17 by InvestingPro, while analysts have set a higher target of $175, suggesting potential upside from the previous close price of $135.06.
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