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On Thursday, Macquarie has increased its price target on Snowflake Inc . (NYSE: NYSE:SNOW) shares to $190 from the previous target of $160, while maintaining a Neutral rating on the stock. Currently trading at $199.32 with a market capitalization of $66.4 billion, Snowflake’s stock is trading near its 52-week high, and according to InvestingPro data, technical indicators suggest the stock is in overbought territory. Snowflake’s first-quarter performance was notably strong, with product revenue climbing 26% year-over-year, surpassing the high end of the company’s guidance by $37 million.
The company also provided guidance for the second quarter that exceeded consensus estimates for product revenue and increased its full-year guidance by $45 million, which is more than the first-quarter beat. The remaining performance obligations (RPO) showed significant growth, up 34% year-over-year, and the current RPO (cRPO) increased by 31% year-over-year. This growth was bolstered by two substantial contracts, each over $100 million, signed by large financial services customers who had exhausted their committed capacity in the fourth quarter. InvestingPro data shows the company maintaining strong momentum with overall revenue growth of 27.5% in the last twelve months.
Despite these positive indicators, there were more moderate aspects to Snowflake’s report. The net revenue retention rate slightly declined by two points quarter-over-quarter to 124%. Additionally, while Snowflake posted a first-quarter operating margin of 9%, four points ahead of its guidance, the company decided to keep its full-year operating margin and free cash flow (FCF) margin targets steady at 8% and 25%, respectively. This decision reflects a cautious approach due to factors such as hiring and slower billings growth.
Snowflake’s financial metrics, particularly the robust growth in RPO and cRPO, demonstrate the company’s continued expansion and the significant commitment from its large financial customers. The unchanged full-year targets, despite a strong first quarter, suggest a conservative stance as the company navigates the current fiscal year.
In other recent news, Snowflake Inc. has seen a series of positive developments, particularly in its financial performance and analyst evaluations. The company reported a robust start to the fiscal year, with product revenue growth of 26%, exceeding expectations. This strong performance led to upward revisions in full-year revenue guidance, now projected at 25%. As a result, several financial firms have raised their price targets for Snowflake. TD Cowen increased its target to $230, RBC Capital Markets to $236, Truist Securities to $235, Monness Crespi Hardt to $245, and Stifel to $220, all maintaining a Buy or Outperform rating.
Analysts from these firms have cited Snowflake’s strong first-quarter results and the potential for continued growth, particularly in the fields of data engineering and AI. The company’s effective go-to-market strategies and new product adoption have been highlighted as key factors in its success. Snowflake’s management also provided an encouraging outlook for the upcoming quarters, further boosting investor confidence. Despite a challenging macroeconomic environment, analysts believe Snowflake is well-positioned to leverage new innovations and maintain its growth trajectory.
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