Snowflake 'One Of The Most Compelling Stories In Software' Ahead Of Earnings: Analyst

As the software industry nears a crossroads, one industry analyst expressed confidence in a few big names ahead of third-quarter earnings season.

The Software Analyst: D.A. Davidson analyst Gil Luria reiterated Buy ratings for Palo Alto Networks Inc PANW, Couchbase Inc BASE and Snowflake Inc SNOW in a note published Monday.

Cybersecurity and Infrastructure Takeaways: For Palo Alto Networks, Luria anticipates strong sales performance aided by improving firewall demand and the aftermath of the Crowdstrike Holdings Inc CRWD outage.

“We believe PANW will easily surpass the sandbagged Q1 ARR guide (implies NNARR is -50% Y/Y at the mid-point) and meet or exceed CRPO expectations as well. If those two metrics are ahead, FY25 ARR guidance is raised, and FY25 Total RPO guidance is maintained and/or raised, all of which we expect, we believe shares will react positively,” the analyst said.

Palo Alto Networks reports earnings on Wednesday.

Meanwhile, Luria is also optimistic about Couchbase, citing dynamics that caused a second-quarter earnings miss as factors that will not recur.

“We thus expect a beat and raise and a rebound in the shares as expectations are low,” the analyst said. Couchbase’s next earnings report is Dec. 3.

Compute Takeaways: Snowflake also reports earnings on Wednesday. Luria believes the Bozeman, Montana-based company is “well positioned” heading into the report, remaining “one of the most compelling stories in software.”

The analyst is optimistic about the company’s artificial intelligence and machine learning initiatives and its appeal among developers. Snowflake meets both of D.A. Davidson’s software benchmarks of price to free cash flow multiples and strong growth.

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