Evercore ISI raises Snowflake stock price target to $232

On Thursday, Evercore ISI increased its price target on Snowflake Inc . (NYSE:SNOW) shares to $232 from $200, while sustaining an Outperform rating on the stock. Currently trading at $179.12, the stock sits near its 52-week high of $194.40, with InvestingPro data showing analyst targets ranging from $115 to $440. The firm’s analysts highlighted Snowflake’s impressive first-quarter results, which saw product revenue reach $996.8 million, a 26% year-over-year increase. This figure notably surpassed the management’s earlier guidance of $955-960 million, which predicted a 21-22% rise. Adjusting for the leap year effect, the growth rate would be approximately 28%.

Snowflake’s operating margins for the quarter were also a positive surprise, coming in at 9% compared to the 5% forecast by the company’s management. According to InvestingPro data, the company maintains a healthy gross profit margin of 66.7% and operates with moderate debt levels, though it’s not yet profitable on a trailing twelve-month basis. In a move reflecting confidence amidst a challenging macroeconomic environment, Snowflake’s management revised its full-year fiscal year 2026 product revenue guidance upwards to $4,325 million, indicating a growth of 25% from the prior guidance of $4,280 million, which forecasted a 24% increase.

The report also noted key developments, including two major customers who had postponed their renewals from the previous quarter, signing contracts worth over $100 million in the first quarter. Additionally, sectors such as technology and retail saw strong performance, while the financial services category maintained its position as the largest. Growth in the Asia-Pacific region was particularly robust.

Snowflake’s product offerings, Snowpark and Dynamic Tables, exceeded internal expectations, and there was growing customer interest in Cortex. On June 3, during the Summit User Conference, Snowflake is set to host its Analyst Day, where it is anticipated that management will provide updates on the company’s broader strategy, particularly focusing on artificial intelligence and the sustainability of revenue growth.

In conclusion, Evercore ISI analysts believe that Snowflake’s revenue stability, coupled with potential operating leverage, could lead to further expansion of its multiple. The firm maintains its Outperform rating and has adjusted the price target to $232, which is based on a 16x enterprise value to the projected calendar year 2026 revenue. Based on InvestingPro’s Fair Value analysis, the stock appears fairly valued at current levels. For deeper insights into Snowflake’s valuation and growth prospects, including 10 additional ProTips and comprehensive financial metrics, investors can access the detailed Pro Research Report available on InvestingPro.

In other recent news, Snowflake Inc. reported strong first-quarter earnings that exceeded analyst expectations, with total revenue reaching $1.042 billion, marking a 26% year-over-year increase. Product revenue alone grew by 26.2% year-over-year, surpassing both BTIG’s estimate of $959.3 million and the consensus estimate of $962.3 million, reaching $996.8 million. This robust performance has led the company to raise its fiscal year 2026 product revenue guidance to $4.325 billion, a slight increase from the previous forecast. Analysts from firms like BTIG, Goldman Sachs, JPMorgan, Barclays (LON:BARC), and UBS have responded positively, raising their price targets to between $210 and $235 while maintaining favorable ratings such as Buy, Conviction Buy, and Overweight.

The company’s strategic focus on artificial intelligence and machine learning, along with its growing partnership ecosystem, has been highlighted as a significant driver of growth. Snowflake’s collaboration with firms like Anthropic and OpenAI, and its significant increase in strategic enterprise commitments, have bolstered investor confidence. The company also reported a notable increase in its remaining performance obligations, with growth accelerating to 31% from the previous quarter’s 27%.

Despite some concerns over free cash flow being below consensus expectations, Snowflake reiterated its fiscal year 2026 free cash flow margin target of over 25%. The company’s ongoing investments in AI services and customer adoption of new features have been seen as positive indicators for its future performance. Analysts from major firms suggest that Snowflake’s evolving role as a comprehensive data operating system could sustain its growth rate and maintain industry-leading free cash flow margins.

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