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On Tuesday, Wolfe Research upgraded Snowflake Inc . (NYSE:SNOW) stock rating from Peer Perform to Outperform and set a new price target at $235.00. The decision comes as the firm recognizes improved core consumption trends, a more favorable competitive environment with hyperscalers, and stronger product momentum, which are expected to drive significant top-line growth. According to InvestingPro data, Snowflake has demonstrated strong momentum with a 46.5% price return over the past six months, though current analysis suggests the stock is trading above its Fair Value.
The analyst at Wolfe Research, Alex Zukin, noted the positive shift in Snowflake's performance since their last downgrade nearly two years ago. At that time, the company faced declining consumption trends, intensifying competition, and stagnating product momentum. The recent changes in these areas have led to the upgraded rating and the optimistic outlook on the company's financial growth. With a market capitalization of $61.9 billion and impressive revenue growth of 30.3% over the last twelve months, the company's transformation is evident in its financial metrics.
The foundation for Wolfe Research's conviction lies in the stabilization and improvement of consumption trends, as evidenced by recent quarters' numbers. The firm's checks indicate a solid fourth quarter with growth around 28%, and they anticipate a fiscal year 2026 product revenue guidance suggesting year-over-year growth of 23%. This outlook sets the stage for mid-to-high 20% growth for the year.
Wolfe Research has raised its growth estimates for Snowflake and has run through an upside scenario that is deemed very reasonable. The analyst believes that 2025 will be favorable for Snowflake, potentially benefiting from enterprise AI tailwinds. Additionally, a product-focused senior leadership team is expected to drive increased consumption from Data Engineering products like Snowpark, Dynamic Tables, Cortex, Polaris (NYSE:PII), and Streaming. While InvestingPro analysis shows the company isn't currently profitable, analysts predict profitability this year. Get access to 8 more exclusive InvestingPro Tips and comprehensive financial analysis in the Pro Research Report, available with your subscription.
Snowflake's stock is anticipated to benefit from these positive trends as the company continues to exhibit one of the highest top-line growth rates in Wolfe Research's coverage. The upgrade reflects a belief in Snowflake's ability to capitalize on its strategic initiatives and market position. With a gross profit margin of 67.3% and strong liquidity position, the company appears well-positioned for future growth despite current premium valuations.
In other recent news, Snowflake Inc. has been a significant point of interest among various analyst firms. KeyBanc Capital Markets maintained its Overweight rating on Snowflake, noting a growing interest in the company's offerings such as Cortex and Iceberg. Mizuho (NYSE:MFG) Securities raised its price target from $195 to $205, citing an improvement in the adoption of Snowpark, Snowflake's developer framework, and expectations of strong product revenue performance. Similarly, Evercore ISI increased its price target to $200, anticipating a moderate outperformance in Snowflake's fourth-quarter product revenue.
Wedbush Securities also raised its price target to $210, recognizing Snowflake's continuous innovation in artificial intelligence and machine learning capabilities. Cantor Fitzgerald initiated coverage of Snowflake with an Overweight rating, highlighting the company's position in the cloud data warehousing sector and a favorable outlook due to strong recent earnings. These developments underscore Snowflake's potential growth and leadership within the data warehousing and analytics market.
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