On Wednesday, Rosenblatt revised its price target for Snowflake Inc . (NYSE: NYSE:SNOW) to $185 from the previous $190, while retaining a Neutral stance on the stock. The adjustment follows Snowflake's fourth-quarter earnings report, which disclosed product revenue growth of 33%, slightly above analyst expectations, and total revenue reaching $775 million, surpassing both the anticipated $767 million and the consensus estimate of $761 million.
The company's fourth-quarter performance exhibited stronger margins of approximately 9%, compared to the expected 5%, with product gross margins hitting 78%. Despite these positive results, Snowflake's forecast for the first quarter's product revenue growth stands at 26-27%, which falls short of the prior consensus growth estimate of 28.7%. Looking further ahead, Snowflake's guidance for fiscal year 2025 anticipates product revenue growth at 22%, notably lower than earlier estimates of 32% and the consensus of 30.4%.
The tempered growth outlook is attributed to similar consumption patterns as the previous year and anticipated challenges, including a roughly 6.25% impact from performance enhancements, the introduction of new tiered storage pricing options, and the forthcoming support for Apache (NASDAQ:APA) Iceberg tables, which is expected to reduce storage demand.
In conjunction with the financial update, Snowflake announced the appointment of Sridhar Ramaswamy as the new CEO, with a focus on advancing product innovation and delivery. Frank Slootman will continue in his role as Chairman.
Following the fourth-quarter report, Rosenblatt has also adjusted its fiscal year 2025 revenue growth prediction to 22% from the earlier 32% and introduced a fiscal year 2026 projection with an expected revenue growth of approximately 22%. The updated valuation, now based on fiscal years 2025 and 2026, led to the revised price target of $185, and the firm anticipates the stock to experience a significant decline due to these results.
InvestingPro Insights
As Snowflake Inc. (NYSE: SNOW) navigates through its growth trajectory, the company's financial health and market performance provide essential insights. According to InvestingPro data, Snowflake's market capitalization stands at a robust $75.74 billion. Despite not being profitable over the last twelve months, analysts on InvestingPro foresee a bright future, with sales expected to grow in the current year and the company predicted to turn profitable within the same timeframe. This optimism is reflected in the company's significant revenue growth of 40.87% in the last twelve months as of Q3 2024, showcasing Snowflake's ability to scale its operations effectively.
InvestingPro Tips highlight that Snowflake is in a strong liquidity position, holding more cash than debt and having liquid assets that exceed its short-term obligations. This financial stability is crucial as the company continues to innovate and expand its product offerings. Moreover, Snowflake's stock has been trading near its 52-week high, with a price 96.75% of that peak, indicating investor confidence and a strong market presence. The company has also seen a large price uptick over the last six months, with a 46.64% total return, reinforcing the positive sentiment around its growth prospects.
For investors looking for more in-depth analysis and additional InvestingPro Tips, there are 11 more tips available, which can provide further guidance on Snowflake's performance and potential investment opportunities. To explore these insights, visit InvestingPro's Snowflake page. And remember, you can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking even more valuable investment information.
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