Shares of software companies have been battered recently amid an increase in the rate of tapering and three potential rate hikes in 2022. As a result, high-growth stocks with long durations have been hurt as well. Indeed, Snowflake (NYSE:SNOW) has not been able to escape the damage. Snowflake stock closed today down more than 9% on no direct news.
Investors were pleased with Snowflake’s Q3 earnings report when the company reported results on Dec. 1. Shares subsequently climbed higher by 13%, powered by exceptional sales and strong revenue guidance. Revenue tallied in at $334.4 million, beating analyst estimates by an impressive 9.4%. Additionally, the company issued Q4 revenue guidance between $345 million and $350 million, which beat the FactSet consensus estimate of $315.9 million.
Furthermore, shares of Snowflake are up 16% year-t0-date (YTD), trailing the S&P 500’s return of 26% during the same period.
As a result of strong earnings, investors should expect bullish analyst price targets. However, it’s worth noting that shares of SNOW stock currently trade at a generous enterprise value to revenue multiple of 107X. This is by no means cheap, even when considering Snowflake’s high gross profit margins of 63.88%. On a positive note, gross profit margins have been growing steadily since Q1 of this year, which is a fantastic sign. Now, let’s take a look at where Wall Street believes Snowflake should be priced.
Snowflake Stock Price Predictions: Where Will SNOW Go Next?
- Credit Suisse recently raised its price target from $455 to $465. Analyst Phil Winslow was impressed by Snowflake’s third-quarter results, highlighting strong revenue growth and impressive operating margins. Winslow views Snowflake as a “true pioneer in cloud-native data analytics” that will play a significant role “across the entire data value chain.”
- Piper Sandler has a $397 price target. Analyst Brent Bracelin is bullish on potential developments and partnerships the software company may incur in the future. Bracelin’s price target represents an upside of 22% from current prices.
- Morgan Stanley has a $344 price target. Like Winslow, analyst Keith Weiss was impressed by Snowflake’s strong third-quarter results. However, Weiss’ price target is notably lower. Weiss expects compound revenue growth to be in the mid-30s range for the next decade and believes that projected growth is already priced into Snowflake stock.
- Finally, Snowflake has an average price target of $387.39 among 28 firms covering the stock.
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