Snowflake (SNOW) is tracking toward a modest fiscal first-quarter revenue beat and positive guidance revisions amid potential product sales upside, RBC Capital Markets said in a note emailed Monday.
The brokerage said markets are assuming 2% to 3% upside to the first-quarter consensus for total revenue of $787 million and product revenue of $744 million. They both imply year-over-year growth of 26%. Shares of Snowflake were up 1.5% in afternoon trade.
The cloud-based data analytics platform topped product expectations by an average of 2.9% over the last four quarters, according to RBC’s analysis. A 2.5% beat in the May 22 report would imply product revenue closer to $762 million, a year-over-year gain of 29%, according to RBC.
RBC is modeling for first-quarter total revenue of $784.5 million and adjusted earnings per share of $0.15, compared with the $0.17 average analyst estimate on Capital IQ.
“We see a better setup this quarter and look for slight upside to estimates and guidance,” Matthew Hedberg, RBC’s head of global technology, internet, media and telecommunications research, said.
The brokerage reiterated an outperform rating on the stock but lowered its price target to $220 from $246 on “peer group multiple compression.” Since the fourth-quarter earnings report, the stock has dropped 29%, compared with a 5% gain for the S&P 500, according to the note.
The target price is based on an 18-times multiple to RBC’s 2025 calendar-year revenue estimate.
For the remainder of fiscal 2025, RBC believes estimates can move higher due in part to the potential for artificial intelligence products to contribute to results this year, accelerating consumption trends, and embedded conservatism in the guidance due to February’s chief executive change.
While management initially guided for 22% revenue growth, RBC sees a “reasonable path” to 27%-plus growth.