Snowflake Inc. doesn’t seem immune from macroeconomic pressure on the software industry, but the company still is winning hefty praise for its long-term vision.
Analysts sounded increasingly upbeat about Snowflake’s
big-picture story in the wake of the data-software company’s Tuesday analyst day, with Snowflake’s commentary even helping win over a new bull on the stock.
“Macro commentary was largely consistent with what we heard a few weeks ago, which is to say things aren’t perfect, but demand remains relatively healthy, and Snowflake is investing into the opportunity it sees ahead,” wrote Canaccord Genuity’s David Hynes, who upgraded Snowflake’s stock to buy from hold late Tuesday while keeping his $185 target price.
He highlighted a number of innovations on the product front, including a “public preview of native Python support, where demand was qualified as ‘through the roof,’” and a new framework that will let data scientists build models into applications that can be shared with business users.
“Each of these innovations opens the aperture of what customers can do with Snowflake, which is synonymous with increased consumption and ultimately better monetization,” he wrote.
Snowflake’s stock is up about 5% in Wednesday trading after rising 0.5% in Tuesday’s session. It’s down 65% on the year as the S&P 500
has lost 21%.
Evercore ISI’s Kirk Materne also weighed in positively on the event.
“[I]f there is one factor that we believe continues to get lost given the near-term macro concerns [it] is the potential network effects of Snowflake’s business and the opportunity for the business to become the ‘enterprise app store’ of a data economy,” he wrote. “We get that investors want to get greater comfort on the economic backdrop before jumping into any high growth story, but we continue to see SNOW as a unique story for those willing to take a 6-9 month view.”
Materne was similarly upbeat on Snowflake’s Python preview, writing that “[b]ringing Python to the forefront allows SNOW to tap into an even greater network of data scientists and engineers.”
He has an outperform rating and $175 price target on the stock.
Cowen & Co.’s Derrick Wood chimed in after the event to write that “the main message was that SNOW’s vision goes well beyond analytics as they set to solve much bigger & more complex business problems,” including security and next-generation app development.
“It’s a good reminder for investors the grandiose vision that SNOW has & why it deserves such a premium,” he added in his note to clients.