Cloud-based data platform provider Snowflake (SNOW) is benefiting strongly from ongoing trends like cloud migration, digital modernization, and more. This is clear from the continued momentum in customer-base expansion. The company is set to announce its third-quarter fiscal 2022 (FQ3) on December 1, and things look respectable ahead of the earnings release.
Snowflake’s technology supports the Data Cloud, an ecosystem that allows the company’s customers and partners to eliminate the use of data silos and generate meaningful insights from data sets securely and ethically. This allows them to build data-powered applications and share data. The ongoing transition from cloud-based software storage and on-premise data centers to the Data Cloud is creating meaningful opportunities for Snowflake. (See Analysts’ Top Stocks on TipRanks)
Against this backdrop, the company announced its Financial Services Data Cloud solution in September this year. The following month, its Media Data Cloud was introduced. As management described, it “enables marketers, publishers and data and ad technology businesses to unlock their data for identity, insights, activation, and measurement across the advertising ecosystem.”
Expert Opines
Ahead of the FQ3 print, Monness Crespi Hardt analyst Brian White is encouraged about the strong data usage trend that continued into the third quarter of this calendar year, and is expected to have impacted the quarterly performance favorably.
White also pointed out that the performances of Snowflake’s key partners in the cloud space have been upbeat this earnings season. That has most likely reflected positively in the company’s performance by bringing in more business.
For instance, Amazon (AMZN), whose cloud arm— AWS—is Snowflake’s largest public cloud infrastructure partner, recently reported the third consecutive quarter of accelerated revenue growth. Additionally, Datadog (DDOG), Snowflake’s partner in the cloud observability space, reported accelerated growth for the second consecutive quarter recently.
Nonetheless, despite the positive outlook, it seems like the analyst is waiting for the valuation to come down to reasonable levels. White reiterated a Hold rating on Snowflake. However, he did not set a price target for the stock.
“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. That said, valuation is not for the faint of heart,” noted White.
Wall Street Weighs In
The Wall Street analyst consensus carries a cautious but optimistic stance on Snowflake, with a Moderate Buy rating based on 9 Buys and 6 Holds. The average Snowflake price target of $376.38 indicates an upside potential of 3.99%.
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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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