Analyst Lowers Snowflake's Price Target Following Earnings Report and CEO Departure

Citigroup's Tyler Radke lowered their price target on Snowflake (NYSE: SNOW) by 17.2% from $290 to $240 on 2024/03/04. The analyst maintained their Strong Buy rating on the stock.

Radke's price target cut followed an assessment of Snowflake's 2024/02/28 Q4 and FY 2024 earnings report and participation in the earnings call. In spite of being "caught off guard" by management's lower revenue guidance and the departure of its CEO, the analyst said they maintained their buy rating notwithstanding Snowflake's 20% stock price dip.

Forecasts have been "adequately de-risked," which means they reflect the "most negative consumption scenarios, optimization headwinds, and new product contributions," even though the early feedback is positive, Radke noted.

Snowflake Inc. reported better-than-expected results for Q4 2024. The company reported earnings per share (EPS) of $0.35, beating the Zacks Consensus Estimate of $0.17 and showing a significant improvement from Q4 2023's $0.14. Revenue for the quarter came in at $774.7 million, surpassing the Zacks Consensus Estimate of $759.88 million and marking a growth of 31.5% compared to Q4 2023's $589.01 million. Operating income margin for Q4 2024 was reported at 9%.

For the fiscal year 2024, Snowflake reported EPS of $0.98, a significant improvement from FY 2023's $0.25. Revenue for FY 2024 stood at $2.81 billion, representing a growth of 35.8% compared to FY 2023's $2.07 billion. The operating income margin for the fiscal year was reported at 8%.

Looking ahead, Snowflake's management provided guidance for Q1 2025, expecting revenue in the range of $745 million to $750 million, with an operating income margin of 3%. For the full fiscal year 2025, the company expects revenue to reach $3.25 billion, with an operating income margin of 6%.

Despite the positive earnings report, Snowflake's stock price dipped by 20% following the lower revenue guidance and the departure of its CEO. However, Radke believes that the forecasts have adequately considered the potential risks and that the stock price dip presents a buying opportunity.

In addition to the price target cut on Snowflake, Citigroup's Tyler Radke also lowered their price target on Elastic Nv by -6.1%, from $165 to $155, while maintaining their Strong Buy rating.

Currently, 68% of top-rated analysts rate Snowflake as a Strong Buy or Buy, while 28% consider it a Hold. Only 4% of analysts recommend or strongly recommend selling the stock.

Since Snowflake's latest quarterly report on 2024/02/28, the stock price has experienced a decline of 22.6%. However, when looking at the year-over-year performance, the stock is still up by 25.2%. During the same period, Snowflake has trailed behind the S&P 500, which has shown a growth of 26.7%.

Tyler Radke, the analyst behind the price target cut, is ranked in the top 8% of Wall Street analysts by WallStreetZen. With an average return of 8.3% and a win rate of 59.3%, Radke specializes in the Healthcare, Financial Services, and Technology sectors.

Snowflake Incorporated is a provider of cloud-based data warehousing solutions. The company offers services such as data warehouse modernization, analytics, data exchange and engineering, and data science. Snowflake's integrated cloud platform, known as the Data Cloud, enables organizations to securely access their data network and architecture to facilitate data workloads. The company serves various sectors, including government, financial services, healthcare, media and entertainment, retail, education, and technology. Snowflake works in partnership with industry giants like Amazon, Google, and Microsoft. Founded in 2012, Snowflake is headquartered in Bozeman, Montana.

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