By Sam Boughedda
Bernstein started Snowflake Inc (NYSE:SNOW) with a Market Perform rating and $166 price target in a note Tuesday, telling investors the company's valuation has been impacted by the recent pullback.
"Snowflake has been one of the darlings of the Cloud world, delivering very strong growth, but its valuation has been hit in the recent pullback in software/Cloud valuations," wrote Bernstein analysts. "The company has executed extremely well and taken meaningful market share in its core data warehousing market and is trying to expand into numerous other markets."
The analysts acknowledged that the company's management has laid out long-term guidance with slowing growth but with one of the fastest routes to $10 billion or more in enterprise software/Cloud product revenue. However, while Bernstein believes the $10 billion in product revenue and 30% year-over-year growth rate exiting FY29 is doable, they feel it is already "baked into the stock's current valuation."
"To meaningfully beat those numbers will require gaining significant revenue and share in new markets competing against strong often entrenched Cloud competitors which we believe is going to be difficult," added the analysts. " While the company has been expanding the reach of their product into adjacent markets, we believe these market opportunities are going to be more difficult and take longer to gain share in than many expect."