Snowflake Jumps as Evercore ISI Starts Coverage With Outperform Rating

Evercore ISI analyst Kirk Materne said there are "few software firms that over the last decade have as large a growth opportunity as Snowflake".
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Snowflake Inc.  (SNOW) - Get Report shares traded higher Friday after analysts at Evercore ISI set their price target on the stock past $300 as they initiated coverage on the cloud-based data-storage group.

Evercore ISI analyst Kirk Materne started coverage on the group with an 'outperform' rating and a $311 price target, some 40% north of it recent average trading levels, citing a potential total addressable marker for Snowflake's data warehousing division at around $78 billion by 2024. 

"We believe there are few software firms that over the last decade have as large a growth opportunity as Snowflake," Materne said. "And while we acknowledge that the stock is going to need to grow into its valuation near-term, we believe the long-term risk/reward and upside optionality warrants and 'outperform' rating."

Snowflake share were marked 3.7% higher in early trading Friday to change hands at $225.00 each, a move that would trim the stock's six-month decline to around 10%.

Earlier this month, Snowflake posted a doubling of revenues for its fiscal fourth quarter, which ended in January, with a topline of $190.5 million, paced by Snowflake's Data Cloud business, which includes customers such as BlackRock  (BLK) - Get Report FactSet and Zillow  (ZG) - Get Report, but also revealed a wider-than-expected loss of $198.9 million.

The group sees revenues for its 2022 fiscal year in the region of $1 billion to $1.2 billion -- a figure that would represent year-on-year growth of more than 80% as well as improving gross margins and product adoption.

For fiscal 2022, our focus is to turbocharge our Snowflake Data Cloud with massive workload execution, expansions and refinements, as well as, expand our data federation with numerous new additions to the Snowflake Marketplace," CEO Frank Slootman told investors on a conference call on March 3. "While our selling motions address some of the world's smallest, as well as, largest data estates in the world, we will have continued emphasis on landing and expanding in the largest enterprises and institutions, not just in the Americas, but also in EMEA and Asia Pacific."