Snowflake Shares Rally On Q2 Results: What 3 Analysts Are Saying

Cloud computing-based data warehousing company Snowflake Inc. SNOW reported better-than-expected results for its fiscal year second quarter, sending its shares higher Thursday.

The Snowflake Analysts: Piper Sandler analyst Brent Bracelin maintained an Overweight rating on Snowflake shares and increased the price target from $290 to $305.

Needham analyst Jack Andrews maintained a Hold rating on the shares.

JMP Securities analyst Patrick Walravens maintained a Market Perform rating and lifted the price target from $300 to $320.

Snowflake Witnessing Robust Trends, Piper Sandler Says: Strong enterprise consumption contributed to yet another quarter of triple-digit product growth for Snowflake, Piper Sandler analyst Bracelin said. The annualized product revenue scaled to above a $1 billion run-rate, the analyst said. 

The addition of 25 new Fortune 500 customers, he said, further validates robust enterprise adoption and brings the Fortune 500 logo penetration to 42%.

Remaining performance obligation growth moderated, in line with expectations, due to a tougher comparison with the year-ago period, the analyst said. On the other hand, cRPO growth accelerated for the third consecutive quarter, he said. 

Based on robust consumption and customer addition trends, Piper Sandler raised its revenue estimates for 2022 and 2023.

Related Link: Is Snowflake's Stock Doomed After A Cross Below Support?

Needham's Key Takeaways On Snowflake: Snowflake is benefiting from the growing demand for modern data workloads as customers use its platform to unlock new and previously unaddressable use cases, Needham analyst Andrews said.

Additionally, the company's Data Cloud vision is resonating well with new customers as they look to avoid data silos and create new AI/ML applications, the analyst said. 

Legacy migrations appear to be contributing more modestly to growth as customers face technical hurdles to move workloads, he said. 

"Despite our positive view on SNOW's fundamentals and what appears to be a significant runway of market opportunity to grow large accounts, we remain HOLD-rated solely based on valuation." 

JMP On 5 Reasons Why Snowflake Offers Long-Term Capital Appreciation: Snowflake offers as an excellent opportunity for long-term capital appreciation, Walravens said.

Firstly, Snowflake's cloud data platform is disrupting the database management systems market, which is valued at about $65 billion, the analyst said. Secondly, Snowflake has a highly differentiated, modern, cloud-native architecture, he said. 

Thirdly, the company's business uses a consumption model and is demonstrating best-in-class net retention rates, Walravens said. Fourthly, the team executing against Snowflake's vision is one of the strongest teams in the software industry, the analyst said. 

Finally, Snowflake is demonstrating its strong product market fit, and has landed nearly 5,000 customers, including 212 of the Fortune 500, and 116 customers that generate over $1 million per year in product revenue, according to JMP. 

SNOW Price Action: Snowflake shares were up 7.66% at $305.26 at the close Thursday. 

Related Link: 4 Snowflake Analyst On Q4 Results: 'A New Enterprise Data Cloud Platform Of Choice'