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Goldman Sachs holds $220 stock PT on Snowflake, highlights product revenue beat

EditorIsmeta Mujdragic
Published 05/23/2024, 07:29 AM
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On Thursday, Goldman Sachs maintained its positive stance on Snowflake Inc . (NYSE: NYSE:SNOW), reaffirming a Buy rating and a $220.00 price target for the cloud-based data-warehousing company.

The endorsement follows Snowflake's first-quarter fiscal year 2025 earnings, which showcased significant financial achievements, including a product revenue that exceeded consensus expectations by 5%, and non-GAAP operating income surpassing estimates by 29%.

The firm's analysis highlighted a year-over-year reacceleration in several key financial metrics for the quarter. Product revenue grew by 34% compared to 33% in the previous quarter, while the current remaining performance obligations (cRPO) and remaining performance obligations (RPO) increased by 31% and 46%, respectively. Notably, the RPO included a $100 million deal.

The appointment of Sridhar Ramaswamy as CEO is seen as a favorable move for Snowflake. Goldman Sachs believes that under Ramaswamy's leadership, Snowflake will continue to deliver innovative products and capitalize on substantial market opportunities in areas such as General AI, Machine Learning/AI, and Online Transaction Processing.

Snowflake's first-quarter results, coupled with an optimistic outlook for fiscal year 2025 and robust bookings, suggest a stable or improving environment for new business and consumption. The management's conservative approach to forward consumption patterns presents the potential for upside, especially with guidance suggesting a slight decrease in second-half product revenue growth expectations compared to previous estimates.

Looking ahead, Goldman Sachs points to the upcoming Snowflake Summit, scheduled for June 3-6, as a key event. The summit is expected to provide further insights into Snowflake's AI product roadmap, including general availability timelines for Unistore and Container Services, as well as the company's long-term growth strategy and competitive positioning, which could support sustained growth.

InvestingPro Insights

As Goldman Sachs reiterates a bullish stance on Snowflake Inc., real-time data from InvestingPro further contextualizes the company's financial health and market position. Snowflake's market capitalization stands at $54.73 billion, reflecting the high expectations investors have for its growth trajectory. Despite not being profitable over the last twelve months, analysts predict the company will reach profitability this year, a sentiment echoed by the robust revenue growth of 35.86% reported in the same period. This growth indicator aligns with Snowflake's recent earnings, where product revenue and non-GAAP operating income have surpassed expectations.

InvestingPro Tips highlight that Snowflake holds more cash than debt on its balance sheet and its liquid assets exceed short-term obligations, suggesting a strong liquidity position that may reassure investors of the company's operational resilience. On the valuation front, Snowflake is trading at a high Price / Book multiple of 10.56, indicating the premium market price attached to its assets. For those considering an investment in Snowflake, there are 7 additional InvestingPro Tips available, which can be accessed with an exclusive offer using the coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing a deeper dive into the company's financial nuances.

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

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