The glass-half-empty view will show the sharing of Snowflake (NYSE: SNOW) is down as much as 70% from last year’s highs just two weeks ago. They have been in freefall since the May earnings report and seem to intend to set new all-time lows for the rest of the summer. But the glass half full view will have you looking at the 40% that have appeared in the past two weeks and the fresh voices that have been added to bull camp. Let’s take a look at some of the reasons why the glass-half-full view is the right one here for Snowflake.
For starters, their most recent earnings report needs to be considered. While this is responsible for the immediate 14% decline due to broader than expected fiscal losses in the first quarter, there is actually a lot to be desired for us with a long-term investment horizon. Yes, EPS was a deeper shade of red than expected, but the company’s earnings exceeded expectations and showed year-on-year growth of 85%. This is an impressive print, especially in light of the 70% share cut went under in the same quarter.
However, the report is enough to sink them to new lows, and in the heat of inflation readings that are even more offensive to tech stocks, you could have been forgiven for removing Snowflake from your watched list and move on. . However, not only have they recently put up an attractive technical low (more on that later), some of the bigger heavyweights on Wall Street are starting to row behind them.
Just two days ago, the team at Jeffries upgraded the data warehousing company, citing recent “significant” multiple compression and the company’s continued success in expanding its platform.
Analyst Brent Thill upgraded Snowflake to a Buy rating from Hold and raised the per-share target price to $ 200 from $ 125, noting that investors should stay in the stock for a long time, “given its large market and plenty of room to double in value while growing to a reasonable lot.”
This $ 200 target price suggests that there is an upside to be gained from where the shares closed on Wednesday of approximately 40%. This should be enough in its own right to make the more skeptical rethink their position. In the upgrade, Thill mentioned that Snowflake, led by Frank Slootman, has “best in class basics” and its implementation has been “near flawless” over the past few quarters, due to Its “all-star management team” has successfully scaled software businesses elsewhere. In his note to clients, he added that “we see some similarities between Snowflake and other best stories on software platforms like Salesforce (NYSE: CRM), ServiceNow (NYSE: NOW), at Datadog (NASDAQ: DDOG) and note that the company is growing faster than its peers in similar revenue sizes ”.
This is a solid solid position to be taken and resonates with the team at JPMorgan that upgraded Snowflake to an Overweight rating from Neutral after its rating rose in a recent CIO study. Analyst Mark Murphy moved the overweight stock from neutral and maintained the company’s $ 165 target price on Snowflake shares, indicating a 30% increase from current levels. In a note to clients, he wrote that “Snowflake enjoys great customer standing seen in our customer interviews and recently laid out a clear long -term vision on its Investor Day in Las Vegas toward cementing its position as a critical emerging platform layer of the enterprise software stack, ”added that it was in“ elite ”territory in the CIO survey.
Despite the poor performance of the shares this year, these two upgrades from some of the more well-known sell-side companies are noticeable and carry considerable weight. Add to this the fact that the techniques support an entry and you have the perfect trifecta. We have a tech stock here that is still growing revenues of over 80% annually, despite a severe marketing defeat, and put up a technical low at the same time they received two serious upgrades.
Participants among us should watch this month’s low value of $ 114 to hold as the shares combine. Assuming there are no nasty surprises around, there’s every reason to think that shares will be trending back to $ 200 before the summer ends.
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