Snowflake (SNOW) Falls Following Investor Day Despite Strong Guidance, Analysts Bullish But Say Investors May Have Wanted More
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Shares of Snowflake (NYSE: SNOW) are down more than 3% in pre-open Friday after the company held its Inaugural Investor Day.
The company provided a strong product revenue target of $10 billion by FY 2029 (calendar 2028) which translates into a 44% CAGR. It is also looking to grow by about 30% annually in that period. The long-term OM guidance is at 10%.
“SNOW provided an impressive long-term outlook. More specifically, mgmt anticipates product revenue of ~$10B in FY29 (CY28), reflecting a 44% CAGR, and roughly 30% growth in the final year of that projection. This is notably more granular than mgmt's prior long-term guidance that it wouldn't shift from a hypergrowth company to a more moderate “growth phase” (~40% product revenue growth) anytime soon. In our view, the new product revenue guide underscores mgmt's confidence in its ability to continue to grow at elevated rates for many years. In addition, it's important to note that this long-term guide doesn't even include any of this week's product announcements,” Mizuho’s Gregg Moskowitz said in a note.
He believes investors may have wanted more as shares trade lower in after-hours. Still, he remains bullish on the Buy-rated stock.
“The primary drivers of SNOW's growth continue to be ongoing cloud workload migrations, large growth in data volumes, and an expansion in data-driven decision-making processes across organizations around the world. SNOW also remains a strong consolidation play, as the co. recently stated that it typically replaces more than one solution when a customer undergoes expansion on the SNOW platform. We fully expect SNOW will continue to break down customer data silos, and that companies will increasingly standardize on SNOW.”
Oppenheimer analyst Ittai Kidron came away from the event “comfortable with our thesis and positive on the company's platform direction and growth prospects.” His rating on SNOW is “Outperform” with a price target of $320.00 per share.
“While the Snowflake Summit product announcements were not groundbreaking, together they highlight the company's steady pace of innovation and broadening platform reach/use case leverage. Again, we view the $10B FY29 revenue target as achievable given the strong and unparalleled adoption metrics, GTM investment, and expanding eco-system,” Kidron said in a memo.
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