Snowflake’s stock is gaining ground today, up 0.5% as of 3:30 p.m. ET after being up as much as 4.8% earlier in the session. This comes despite the S&P 500 index being down 0.3% and the Nasdaq Composite index down 0.7%. Snowflake’s rise is attributed to bullish coverage from Oppenheimer.
The firm published new coverage on Snowflake, maintaining an outperform rating and raising its one-year price target from $180 per share to $200 per share. This suggests a potential upside of about 22.5%. Oppenheimer has identified Snowflake as one of its top investment ideas for the year.
Analyst Ittai Kidron believes that Snowflake can deliver strong quarterly results this year, driven by the rollout and scaling of new services and AI offerings.
Oppenheimer’s bullish outlook on Snowflake
Kidron also expects Snowflake’s consumption-based business model to drive robust results and sees potential for operating margin expansion as the company emerges from a period of heavier investment.
Despite recent gains, Snowflake’s stock remains down roughly 59% from its high. The company currently has a market cap of about $58.9 billion and is valued at roughly 15 times this year’s expected sales. In its last quarterly report, Snowflake’s revenue increased 29% year over year to $900.3 million.
The company posted a net revenue retention rate of 127% in the quarter, which is strong but below the retention rate seen in previous years. Snowflake benefits from demand tailwinds due to AI and large language model systems but faces increasing competition from cloud hyperscalers with their own data integration solutions and specialized industry players like Databricks. While the stock has significant upside potential at current prices, it also carries risk within the competitive cloud software space.
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