Snowflake Gains as Analysts Boost Targets on Surging Revenue

(Bloomberg) — Snowflake Inc. gained as much as 11% Thursday as analysts praised the software developer’s surge in revenue and boosted their price targets on the stock, brushing off concerns about the company’s disappointing quarterly guidance.

Morgan Stanley said the company’s fourth-quarter product revenue guidance was just in line with consensus expectations, which underperforms the big beat and raise cadence of similar high-flying recent initial public offerings. Snowflake shares have climbed 168% since its September IPO.

At Deutsche Bank, analyst Patrick Colville said the lower-than-expected guidance could prove conservative. Instead, the bank focused on Snowflake’s year-over-year revenue growth of 119% in the third quarter.

“This growth is suggestive of a very large TAM [total addressable market] and clear product market fit,” he said.

chart: Shares gained as analysts brushed off disappointing guidance

© Bloomberg
Shares gained as analysts brushed off disappointing guidance

Deutsche Bank and Morgan Stanley boosted their price targets to $335 from $305 and to $265 from to $220, respectively. Mizuho Securities USA and Piper Sandler also increased their targets. The company now has 9 buys, 12 holds and one sell recommendations.

In contrast, analysts were bearish on the outlook for software peer Splunk Inc., which tumbled 24% Thursday. The company reported weaker-than-anticipated results and suspended its long-term financial targets, leading to downgrades from JPMorgan, Mizuho Securities and Stifel, among others.

Read more: Splunk Plummets With Analysts ‘Blindsided’ by Weakness (3)

(Updates shares to market open; updates chart.)

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