Snowflake price targets lowered on ‘conservative’ sales guidance

The cloud computing software firm received price target downgrades from several analysts, after the release of its Q1 results.

  • Snowflake Inc. (NYSE: SNOW) share price fell 5% the day after it revealed that net losses more than doubled in Q1
  • Nevertheless, CEO Frank Slootman called the results ‘strong’, with revenue surging 110%
  • The company also forecasted for Q2 product revenue to grow between 88% and 92%
  • One analyst believes the guidance is ‘conservative’ as he lowered his price target
  • Buy and sell Snowflake stocks with an IG account

Snowflake posts mixed results in Q1

Snowflake’s stock price target has been lowered by several Wall Street analysts, after its losses more than doubled for its latest reporting quarter from a year ago.

The cloud computing software firm posted a net loss of US$203.2 million, or US$0.70 a share, for the first quarter of fiscal 2022, up from US$93.6 million in the first quarter of fiscal 2021.

This exceeded analysts’ earlier estimates for a net loss of US$0.51 a share.

Snowflake shares fell 5% within the first sixty minutes of trading when markets reopened the next day.

Nevertheless, the company recorded what CEO Frank Slootman called ‘strong’ results, with revenue burgeoning 110% year-on-year to US$228.9 million for the quarter.

In terms of outlook, Snowflake forecasted that second-quarter product revenue will grow between 88% and 92% to between US$235 million and US$240 million.

Why are analysts bearish on SNOW?

Canaccord analyst David Hynes lowered his firm’s price target on the stock to US$240 from US$275 while keeping a ‘hold’ rating.

His price target is predicated on the belief that some of the current bullishness on the stock first needs to taper off before the risk/reward starts becoming more favourable.

Deutsche Bank’s Patrick Colville also cut his price target to US$248 from US$300 alongside a ‘buy’ call, citing Snowflake’s ‘conservative’ product growth guidance.

Similarly, Loop Capital analyst Yun Kim slashed his price target to US$250 from US$270 while maintaining a ‘hold’ rating,

Although the company reported another strong quarter with all metrics showing continued ‘strong momentum’, much of the current sales momentum and potential market opportunity around cloud data platform and cloud data lake are already priced into the stock’s price, with it trading at 58 and 38 times of 2021 and 2022 sales projections, Kim said.

Bucking the price downgrade trend was Evercore ISI analyst Kirk Materne, who reiterated a US$311 target and ‘outperform’ rating.

Materne wrote that while Snowflake’s share price could ‘remain range-bound in the near-term’ as the stock continues to grow into its valuation, the risk/reward for long-term investors remains ‘skewed to the upside’ given that it is ‘one of the most unique hyper-growth stories in software’.

Trade today's hottest assets - from stocks to forex - with IG

Create an IG account or log in to your existing account to get started now.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Look closer this US earnings season

Discover opportunities with using our award-winning technology* and range of educational resources.

  • Get expert analysis on upcoming announcements
  • Set automated alerts to never miss an opportunity
  • Choose from 16,000+ shares with our stock screener

* Based on the Investment Trends 2018 Singapore CFD & FX Report based on a survey of over 4,500 traders and investors. Awarded the Best Online Trading Platform by Influential Brands in 2021.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.