Snowflake’s (SNOW) September 2020 IPO was a splashy affair and the company’s valuation was immediately pointed out as rather lofty.
However, investors appear to have taken the view the data warehousing company’s outstanding growth justifies the valuation and have sent shares even higher this year, with the stock’s 29% year-to-date uptick outpacing the major indexes’ record beating gains.
Ahead of the company’s 3QFY22 results (Wednesday, Dec 1, AMC), Monness’ Brian White expects more top-line growth.
The analyst anticipates the company will “at least meet” his revenue forecast of $317.2 million – a 99% year-over-year uptick and above the Street’s call for $305.6 million – and calls for a loss per share of $0.07 – consensus has -$0.06.
Going by the quarterly performance of other related companies with exposure to “cloud momentum,” White notes the macro environment “remains positive for Snowflake.”
And with the company about to exit “another year of strong growth” the analyst’s Q4 revenue forecast is also above the consensus estimate; White anticipates FQ4’s outlook will call for an increase of 89% from the same period last year to reach $359.1 million vs. the Street’s forecast of $339.4 million. White anticipates the company will exhibit a loss per share of $0.06, just as the Street does.
However, when all is said and done, it’s back to that sticking point which the analyst believes trumps the company’s excellent positioning and execution.
“We believe Snowflake’s unique platform is magnified by the onset of strong secular trends including cloud migration, unprecedented data generation, and digital modernization initiatives,” the 5-star analyst said before adding that the “valuation is not for the faint of heart, and the tech tape more temperamental.”
Therefore, White remains on the sidelines with a Neutral (i.e., Hold) rating and no fixed price target in mind. (To watch White’s track record, click here)
So, that’s Monness’ view, what does the rest of the Street make of SNOW’s prospects? Based on 9 Buys vs. 6 Holds, the analyst consensus views the stock a Moderate Buy. The $381.62 average target suggests shares have room for a modest 4% uptick over the coming months. (See SNOW stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
