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On Monday, Evercore ISI adjusted its outlook on Snowflake Inc . (NYSE: NYSE:SNOW), lowering the price target to $170 from the previous $225, while reiterating an Outperform rating on the stock. The firm anticipates Snowflake to achieve a slight 2-3% increase above the consensus estimates for its F2Q product revenue, which is projected to be $812.3 million, marking a 27% year-over-year growth.
The analysis by Evercore ISI suggests that any positive results in F2Q are likely to contribute to the full-year 2025 guidance, with a modest potential increase to the F3Q estimates, which are expected to be in the low 20% range. However, there is a belief that market bears will focus on the expected slowdown in F4Q, as the current economic climate is unlikely to lead to significant upward revisions in the company's guidance.
Evercore ISI pointed out that the reduced margin guidance provided in the previous quarter might leave room for positive surprises. Nonetheless, the firm does not foresee the second-quarter results acting as a turning point for investor sentiment. This is because the guidance for the second half of the year is predicted to remain cautious and it is considered too early to observe substantial advancements in artificial intelligence initiatives by Snowflake.
The firm concluded that while the risk/reward balance for Snowflake skews positive, investors will need to exercise patience. The new price target of $170 is based on a 14x enterprise value to CY25 revenue multiple, adjusted to reflect the challenging macroeconomic conditions and the expectation that significant estimate beats are unlikely in the near term.
In other recent news, Snowflake Inc. has seen a series of analyst adjustments. KeyBanc Capital Markets maintains an Overweight rating on the company, anticipating a robust earnings report for the second fiscal quarter. The firm cites strong bookings and potential revenue from new product offerings as key growth drivers. BofA Securities, however, has reduced its price target for Snowflake to $160 while maintaining a Neutral stance, awaiting further evidence of sustained consumption recovery and success with new products.
Mizuho Securities also lowered its price target for Snowflake to $165 but continues to endorse the stock with an Outperform rating, believing the company's conservative guidance could lead to an upside. Goldman Sachs has reaffirmed a Buy rating for Snowflake, suggesting purchases of Snowflake calls ahead of the company's earnings release.
Despite concerns about competition and recent security issues, Snowflake continues to innovate. The company has launched new AI development tools and announced the launch of Polaris (NYSE:PII) Catalog, an open catalog for Apache Iceberg.
InvestingPro Insights
As investors digest the latest analysis from Evercore ISI on Snowflake Inc. (NYSE: SNOW), it's important to consider a broader financial perspective. According to InvestingPro data, Snowflake boasts a robust market capitalization of $42.87 billion, despite a negative P/E ratio of -45.71, reflecting market confidence in its growth potential. The company's revenue has grown by a notable 32.85% over the last twelve months as of Q1 2023, showcasing its ability to expand in a competitive technology sector.
Two InvestingPro Tips highlight Snowflake's financial health and potential for future profitability. Firstly, the company holds more cash than debt on its balance sheet, providing a cushion against market volatility. Secondly, analysts predict the company will be profitable this year, which could be a turning point for investor sentiment. These insights are particularly relevant as Snowflake navigates through macroeconomic challenges and invests in artificial intelligence initiatives.
For those looking to delve deeper into Snowflake's financials and future outlook, there are additional InvestingPro Tips available at https://www.investing.com/pro/SNOW. These tips could provide valuable guidance for investors looking to make informed decisions in the context of the current economic climate and Snowflake's strategic direction.
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