Snowflake Takes Beating Despite Strong Results: 5 Analyst Deep Dives On Q2 Print

Shares of Snowflake Inc SNOW declined in early trading on Thursday, despite the company reporting better-than-expected results for its fiscal second quarter.

The results came amid an exciting earnings season.

Here are some key analyst takeaways from the earnings release.

• Piper Sandler analyst Brent Bracelin maintained an Overweight Hold rating, while reducing the price target from $210 to $205.
• Mizuho Securities analyst Gregg Moskowitz reiterated a Buy rating and price target of $180.
• Morgan Stanley analyst Keith Weiss reaffirmed an Overweight rating and price target of $215.
• Goldman Sachs analyst Kash Rangan maintained a Buy rating and price target of $210.
• Needham analyst Mike Cikos reiterated a Buy rating and price target of $216.

Check out other analyst stock ratings.

Piper Sandler: “Product growth moderated for the seventh straight quarter to 37% y/y from triple-digit growth peak of 110% in October 2021,” Bracelin wrote in a note.

“We are encouraged by healthy July contract signings that, if sustained, could result in a potential 2024 growth reacceleration after two years of moderation,” the analyst said. “Product innovation coupled with Gen AI interest continues to be a bright spot."

Mizuho Securities: Snowflake reported “solid” results for the fiscal second quarter, with better-than-expected product revenue growth of 37% year-on-year, Moskowitz said.

While product revenue guidance for the fiscal third quarter was broadly in-line with expectations, management “signaled stabilization in new bookings,” the analyst mentioned.

“While an increased focus on cost optimization by macro-sensitive customers continues to weigh on the business near-term, we're confident that SNOW's competitive positioning remains strong,” he added.

Morgan Stanley: “After several quarters of declining growth expectations, holding the FY24 guide and reassuring mgmt commentary should soothe investor concerns,” Weiss wrote in a note.

“Given SNOW's strong secular positioning, we remain confident the recovery is on the come,” he added.

Goldman Sachs: Following three quarters of downward revisions, Rangan says the reiteration of full-year product revenue guidance reflects expectations of “stabilizing consumption trends and improved bookings activity in June-Aug."

“Given the company’s strong competitive positioning, we continue to view Snowflake as well positioned to capitalize on a generational shift of data and analytics to the cloud, with strong secular tailwinds including cloud adoption, big data, AI/ML, and secure data sharing which we expect will drive durable growth for the foreseeable future,” he added.

Needham: Management's decision to maintain the full-year guidance signals that “consumption trends are stabilizing and the outlook screens conservatively,” Cikos said.

“Furthermore, the company alluded to customers re-engaging and more positive Bookings trends,” the analyst wrote. “When combined with new product introductions, these data points align for an improved set-up over the remainder of the year into FY25."

SNOW Price Action: Shares of Snowflake had declined by 2.22% to $152.25 at the time of publication Thursday.

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