Snowflake shares are on track for biggest jump since May 14

Snowflake shares are on track for biggest jump since May 14

Snowflake Inc. shares were headed toward their best performance in more than six months after the software company's latest earnings report was met with a flurry of praise.

Snowflake shares of SNOW were up 9.6% in Wednesday trading, and on track for their largest single-day gain since May 14, when the stock rose 11.6%.

The company saw its revenue more than double in the last quarter and sent an optimistic signal about its future pipeline, according to analysts.

Gregg Moskowitz, Mizuho analyst Gregg Moskowitz said that l arge deal activity appears to be building and international markets are picking up momentum. We maintain that SNOW's offerings are substantially ahead of the competition at this time. Moskowitz commented on Snowflake's management team noting that the company had a breakout quarter for bookings and consumption, even though some of its outperformance came from stronger than expected consumption by Snowflake's largest customers. Snowflake's results were phenomenal, he said. Moskowitz concluded that we continue to believe we are in the early stages of a powerful trend in which companies will largely standardize on SNOW's platform, while reiterating a buy rating and $450 price target.

Citi Research analyst Tyler Radke urged Snowflake's stock to buy from neutral after the company's performance.

In a note to clients, Radke wrote that SNOW is at an inflection point after very strong Q 3 results and positive checks from AWS re: Invent where we saw signs of budget unlock in large enterprise cloud deals and a more favorable competitive partnership environment.

He believes that Snowflake can continue to improve its beat raises, given the significant deceleration implied in Street estimates in FY 22, where the Street models just 65% product growth compared to 110% reported. Radke increased his price target to $470 from $299.

Evercore ISI spokesman Kirk Materne was positive about Snowflake's reacceleration in product revenue growth during what he called a monster quarter for the company.

The bigger than expected beat was driven by strong consumption from some of SNOW's larger customers, but the upbeat guide for F 4 Q product revenue 94 -- 96% shows that the trends in the business are durable, and why Snowflake remains one of the really unique hyper-growth stories in software, he wrote.

Snowflake is not going to be immune to more market gyrations if the macroeconomic landscape stays volatile, he said, but he likes the company's long-term prospects. He rates the stock at outperform and boosted his price target to $400 from $380.

Snowflake posted its first quarter on the record of positive adjusted earnings and had a net revenue retention rate above 170%, a high for Oppenheimer's Ittai Kidron.

A long trajectory of rapid revenue increases for the next few years fueled by the Information Technology shift to a cloud-centric model, digital transformation and higher spending on machine learning data science, he wrote in a note to clients, while reiterating his outperform rating and lifting his target price to $400 from $360.

Snowflake's shares have increased 23% this year, as the S&P 500 SPX has gained 21%.