Analysts say Snowflake didn’t do enough to articulate its strategy, address competition concerns or reassure on growth outlook
Investors and analysts wanted more from Snowflake Inc., beyond the company’s latest earnings beat and outlook hike.
While Snowflake’s (SNOW) results came in better than expected Wednesday afternoon, the data-software company didn’t deliver the same magnitude of a sales beat as it has in the past. Morgan Stanley analyst Keith Weiss noted that the company topped expectations by about 2%, whereas a quarter before it had logged a 5% beat.
From Weiss’s perspective, “the trajectory of decelerating growth likely fails to address existing bear cases around rising competitive intensity.”
He wrote: “Waning optimization headwinds and emerging new product initiatives should support growth, but investors may need more concrete signals to get onboard.” Weiss has an equal-weight rating and $175 target price on the stock.
Snowflake shares are down 13.7% in afternoon trading Thursday and on track for their worst single-day percentage decline in about six months.
Bernstein’s Mark Moerdler also thought management could have done more to reassure investors about the growth trajectory ahead. “There continues to be a lack of clarity around what to expect from the company,” he wrote, noting that Snowflake yanked its fiscal 2029 forecast earlier this year and has otherwise given “unpredictable guides.”
“The future growth drivers are not well articulated or understood,” Moerdler wrote. “Investors need a north star that helps them understand the long term trajectory of the business, or it will be difficult to have faith in the company.”
He rates the stock at market perform with a $130 target price, down from $185 previously.
Wedbush analyst Taz Koujalgi flagged that Snowflake grew product-revenue dollars by less in the latest quarter, on a sequential basis, than it did in the previous one. “Typically, the [quarter-over-quarter] growth in product revenues has always been higher in a [second quarter versus a first quarter], and hence this raises some questions about usage/consumption slowing down,” he wrote.
Another topic for investors to consider is how conservative the company’s outlook is. Snowflake boosted its product-revenue outlook for fiscal 2025 by more than the amount of its latest beat, but “the guide is not aggressive,” according to Koujalgi’s analysis.
He rates the stock at neutral with a $140 target price.
Deutsche Bank’s Brad Zelnick is more upbeat about the stock, but he also acknowledged that the results were “shy of convincing skeptics.”
Snowflake’s earnings showed encouraging signs of new-product uptake, and the company plays into a compelling market that could support multiple winners, according to Zelnick.
But “the follow through to consumption revenue from newer features and [artificial-intelligence] investments remains the bigger question for investors, for which more tangible evidence is likely needed to alleviate concern that Snowflake is being negatively disrupted by fast paced innovation occurring up and down the data/AI stack.”
He cut his target price to $180 from $220, while sticking with a buy call.