Snowflake (SNOW) is a cloud-based data platform provider that offers machine-learning tools for data scientists and business analysts. Its compelling Data Cloud platform addresses various operational requirements of financial products.
The company’s aggressive go-to-market focus on industry verticals has driven impressive top-line growth for the past few quarters. I am bullish on Snowflake’s prospects. (See Snowflake stock charts on TipRanks)
Importantly, the Financial Services vertical is one of the largest and fastest-growing verticals of the company. In its last reported quarter, Snowflake’s Financial Services customer product revenues more than doubled on a year-over-year basis, representing the largest contribution to total revenues.
Needham analyst Jack Andrews participated in Snowflake’s Financial Services Data Summit, and reported a few important takeaways.
A key topic of discussion at the event was the capabilities of the Financial Services’ Data Cloud platform, and how it has solved previously unaddressable needs with unique new services.
Moreover, important customers like the New York Stock Exchange and Blackrock also testified for Snowflake’s valuable Data Cloud strategy, comparing it favorably with solutions from other companies. In the fiscal second quarter, the company had 450 Data Cloud customers, which represented 16% of its total customers for the quarter, up 1% sequentially.
Andrews believes that growth in demand for data warehouses, along with demand growth for analytics is a positive for Snowflake. “We believe SNOW’s value proposition of democratizing data warehouses across new business units should remain healthy and continue for several years,” he noted.
However, the analyst is wary of the competition. He believes that growing competition, combined with the company’s efforts to migrate legacy solutions to data warehouses, can dampen its focus on the development and growth of its software. Thus, on the basis of these observations, Andrews assigned a Hold rating to the stock. However, he did not provide any price target.
Wall Street also seems to be cautiously optimistic, with a consensus rating of Moderate Buy on Snowflake, based on nine Buys and 10 Holds. The average Snowflake price target of $313.47 indicates a downside potential of 3.3%.
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Disclosure: At the time of publication, Chandrima Sanyal did not have a position in any of the securities mentioned in this article.
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