Argus maintains Hold on Snowflake stock amid growth phase

On Wednesday, Argus issued a statement reiterating their Hold rating on Snowflake Inc . (NYSE: NYSE:SNOW), a prominent player in the cloud-native data warehousing space. Trading near its 52-week high of $208.31, the stock has demonstrated strong momentum with a 15.2% gain in the past week alone. According to Argus, Snowflake is currently in a phase of building and investment, particularly focusing on new product enhancements in the areas of artificial intelligence and machine learning. While these developments are not expected to contribute to near-term revenue, they hold the potential for future benefits.

Snowflake has recently overhauled its go-to-market strategy, and despite the investments not yet yielding immediate financial returns, the company’s product pipeline is described as robust. With revenue growing at 27.5% and maintaining a healthy gross profit margin of 66.6%, management at Snowflake has expressed a strong commitment to expanding margins and has emphasized that product revenue growth remains a critical indicator of the company’s performance. InvestingPro analysis shows that while the company isn’t currently profitable, analysts predict profitability this year.

The analyst from Argus pointed out that while the shares of Snowflake are considered to be highly valued in comparison to its industry peers, a sustained improvement in the key performance indicator of product revenue growth, coupled with the anticipated margin expansion, could lead to a more favorable view and potential upgrade in the future.

As Snowflake continues to invest in its future capabilities, particularly in the realm of artificial intelligence and machine learning, the company’s strategic decisions and financial metrics will continue to be closely monitored by investors and analysts alike. Argus’s current Hold rating reflects a watchful approach to Snowflake’s ongoing developments and future potential.

In other recent news, Snowflake Inc. reported a strong start to the fiscal year with impressive first-quarter results. The company saw a 26% year-over-year increase in product revenue, surpassing its own guidance by $37 million. This positive performance led Snowflake to raise its full-year revenue guidance by $45 million. Citi analysts increased their price target for Snowflake shares to $245, maintaining a Buy rating, citing the company’s resilient consumption and strong bookings, including two $100 million deals in the financial services sector. Macquarie also raised its price target to $190, highlighting the company’s robust growth in remaining performance obligations, despite a slight decline in net revenue retention rate. TD Cowen adjusted its price target to $230, noting Snowflake’s effective go-to-market strategies and the successful adoption of its Data Engineering products. RBC Capital Markets increased its price target to $236, emphasizing the company’s product revenue growth and its ability to outperform consensus predictions. Additionally, Snowflake announced a three-year partnership with the LA28 Olympic and Paralympic Games and Team USA, aiming to enhance athlete performance and fan engagement through its AI Data Cloud capabilities.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.