On Thursday, Piper Sandler maintained a positive outlook on Snowflake Inc . (NYSE:NYSE:SNOW), reiterating an Overweight rating and a $240.00 price target. The firm acknowledged Snowflake's significant product revenue beat, which surpassed the mid-point of guidance by $42 million—the largest since its 2020 initial public offering. Product revenue growth showed a slight acceleration to 34% year-over-year, compared to 33% in the previous quarter.
The increase was attributed to the company's core strength and improving consumption trends. Additionally, committed remaining performance obligations (cRPO) saw growth reaccelerate above 30%, and overall remaining performance obligations (RPO) also picked up pace, increasing to 46% year-over-year. This was supported by a notable renewal of over $100 million.
Snowflake's position in the artificial intelligence (AI) space appears promising, with 750 customers adopting Cortex AI shortly after its general availability. The company also observed several large-scale migrations from Spark to Snowpark among the Global 2000 (G2K) companies. Despite a 28% decline in Snowflake's share price over the past three months due to concerns about growth headwinds and leadership transitions, Piper Sandler views these concerns as exaggerated.
The analysis suggests that the second half guidance, which may indicate a further deceleration, should be interpreted with caution. Piper Sandler's stance remains firm on the Overweight rating and the $240 price target, signaling confidence in Snowflake's growth trajectory and market position.
InvestingPro Insights
With Snowflake Inc. (NYSE:SNOW) capturing the attention of analysts and investors alike, it's important to consider additional insights that highlight the company's financial health and market position. According to InvestingPro data, Snowflake has a market capitalization of $54.73 billion, reflecting its significant presence in the tech sector. Despite not being profitable over the last twelve months, the company holds a strong cash position relative to its debt, and its liquid assets exceed short-term obligations, providing financial stability.
InvestingPro Tips further reveal that analysts predict Snowflake will become profitable this year, which aligns with Piper Sandler's optimistic outlook. However, the company is trading at high valuation multiples, with a Price to Book multiple of 10.56 and a forward P/E ratio of -62.43, indicating expectations of future growth are factored into the current stock price. Snowflake's revenue growth remains robust, with a 35.86% increase over the last twelve months as of Q4 2024, showcasing its ability to expand its top line effectively.
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