Barclays Upgrades Snowflake (SNOW) to Overweight, Names Salesforce (CRM) Top Software Pick for 2022

January 12, 2022 8:05 AM EST
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Price: $132.77 +2.42%

Rating Summary:
    21 Buy, 9 Hold, 2 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 10 | Down: 13 | New: 20
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Barclays analyst Raimo Lenschow upgraded shares of Snowflake (NYSE: SNOW) to Overweight from Equal Weight as he believes the recent selloff has created an attractive entry point.

A new price target is $367.00 per share, down from the prior $393.00.

“Snowflake is a unique asset in our space given the growth profile, scale, and importance to customers, which is reflected in its best-in-class retention rates. Up until now we have remained on the sidelines, as the valuation has looked full since the IPO in 2020. However, we view the recent pressure on shares as an attractive entry point for long-term investors, with the valuation level near all-time lows,” Lenschow wrote in a client note.

The analyst especially highlights SNOW’s data sharing that offers a “critical differentiating development with a strong value proposition.” Lenschow sees Snowflake can sustain strong and high growth, ahead of the market expectations.

The analyst also named Salesforce (NYSE: CRM) a Top Pick in the firm’s US software coverage as he believes the company is well-positioned to continue to outperform in 2022.

“We believe that this combination of reliable growth and inflecting profitability makes Salesforce a core holding in the midst of uncertain times. Given the proper cash flow level and at a reasonable valuation of 25x CY23 EV/FCF, we find this opportunity particularly enticing,” Lenschow added.

By Senad Karaahmetovic | [email protected]

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