Shares of cloud data platform Snowflake (NYSE:SNOW) have plunged more than 31% since the company announced its fiscal fourth-quarter results. While the results exceeded expectations, investors were disappointed with the company’s guidance and the unexpected announcement of a CEO change. Nonetheless, most analysts remain upbeat about Snowflake’s prospects and see the pullback in the growth stock as a good opportunity to buy it with a long-term horizon.
Snowflake’s Recent Performance
Snowflake’s Q4 Fiscal 2024 revenue increased 32% year-over-year to $774.7 million, while the company’s adjusted EPS (earnings per share) jumped to $0.35 from $0.14 in the prior-year quarter. The company ended the quarter with 461 customers with trailing 12-month product revenue of greater than $1 million.
Despite the upbeat Q4 results, shares fell as the company’s Q1 FY25 product revenue guidance of 26% to 27% growth and full-year Fiscal 2025 outlook of 22% growth indicated a slowdown in the business. The company also announced that its CEO, Frank Slootman, will retire and be succeeded by Google’s former ad chief, Sridhar Ramaswamy.
Snowflake is confident about its future under Ramaswamy’s leadership and highlighted that he helped grow Google AdWords and its advertising business from $1.5 billion to more than $100 billion.
Analysts’ Bullish Reviews on SNOW Stock
Earlier this month, Rosenblatt analyst Blair Abernethy upgraded Snowflake stock to Buy from Hold with a price target of $185 following a customer event in Toronto at which the company unveiled several new products that are expected to become billable later this year.
Abernethy expects broad-based consumer interest in Snowflake’s platform. He added that the company’s growing ecosystem continues to be very healthy. The analyst thinks that the post-Q4 results weakness in the stock presents a buying opportunity. He views the company’s developer framework, Snowpark, as a vital catalyst to boost longer-term customer retention levels.
Likewise, KeyBanc analyst Eric Health is also bullish on SNOW stock. On April 11, he initiated coverage of Snowflake stock with a Buy rating and a price target of $185. The analyst cited several positives for his bullish stance, including the company’s “durable” 20% growth.
Health noted that SNOW’s expected top-line growth is supported by continued migrations of legacy data warehouses to the cloud, a notable expansion of the product portfolio, and the company’s easy-to-use platform for developing and hosting generative AI workloads. The analyst is also optimistic about the new CEO.
Goldman Sachs analyst Kash Rangan, who has a Buy rating on SNOW stock, is also confident about the expertise of CEO Ramaswamy. Given Ramaswamy’s previous achievements in expanding Google’s advertising division, the analyst believes that the CEO has the potential to drive significant growth at Snowflake.
Rangan also highlighted Snowflake’s refined go-to-market strategies and focus on innovative product development, mainly focused on key areas like data warehousing, transactional databases, machine learning, and generative AI.
Is Snowflake a Buy or Sell?
With 24 Buys, 11 Holds, and two Sells, Wall Street has a Moderate Buy consensus rating on Snowflake. The average Snowflake price target of $211.26 implies 33.6% upside potential.
Conclusion
Despite the near-term weakness, several analysts are optimistic about Snowflake as they believe in the growth potential of the company’s platform, which is helpful in collecting, storing, and processing data for enterprises that are developing their AI models.
