On Monday, Wells Fargo (NYSE:WFC) reaffirmed its confidence in Snowflake Inc . (NYSE: NYSE:SNOW), maintaining an Overweight rating with a steady price target of $225.00. The firm underscored Snowflake's robust operational performance and significant market opportunity as justifications for the high valuation the company commands within the software sector.
The financial institution pointed to Snowflake's current trading metrics, which are at 17 times enterprise value to sales (EV/S) and 57.5 times enterprise value to free cash flow (EV/FCF) on a next twelve months estimated (NTMe) basis. These multiples are among the highest in the software industry. Despite this, the firm believes that the valuation is justified due to Snowflake's strong operating profile.
The $225.00 price target set by Wells Fargo is based on a 65 times multiple of EV/FCF, which translates to an estimated 19 times EV/S on a forward next twelve months basis. This valuation framework reflects the analyst's expectation of Snowflake's continued growth and dominance in the data software landscape.
Wells Fargo also announced an upcoming conference call featuring a discussion with an industry Chief Technology Officer (CTO). The call will delve into the dynamic data software sector, identifying the companies that are emerging as winners and losers. Sales representatives are the point of contact for clients interested in registering for this event.
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