RBC Capital initiated coverage on Snowflake Inc . (NYSE:SNOW) with an Outperform rating and set a 12-month price target of $230.00 on the stock.
“We are bullish on their LT growth opportunity and think upside to consensus estimates seems likely.” Wrote analysts in a note.
RBC Capital has a long history of engagement with Snowflake's management, including through prior companies. Their analysts hold the view that Snowflake stands as a top-tier company, showcasing strong execution capabilities.
RBC also holds the belief that Snowflake has the capacity to draw and retain top talent in the industry. Consequently, RBC asserts that Snowflake boasts a highly skilled executive team across Sales & Marketing, Research & Development, and General & Administrative areas.
Furthermore, despite the cloud optimization trends in 2023, RBC thinks platforms supporting multi-cloud strategies will succeed. They were happy to see cloud spending stabilize in Q3/23 and predict stability and improvement in 2024, partly due to easier comparisons. This is good news for Snowflake, especially with its recent initiatives for GenAI workloads.
RBC believes Snowflake's strong data strategy precedes its GenAI approach. With ample customer data and new GenAI offerings, Snowflake's workload use is set to increase. RBC expects the real impact to show in 2025 and beyond when these new products are fully rolled out. Overall, they see GenAI as a crucial factor in achieving their target of $10 billion in product revenue with 25% operating margins and 30% adjusted FCF margins by fiscal year 2029.
Shares of SNOW are up 0.42% in pre-market trading Friday morning.