Shares of Snowflake Inc SNOW fell in early trading Thursday after the company reported weak quarterly sales.
The company reported its results amid an exciting earnings season. Here are some key insights from analysts.
JPMorgan on Snowflake
Analyst Mark Murphy reiterated his “overweight” rating, but lowered the price target from $185 to $175.
Snowflake’s second-quarter results “became less ahead of guidance compared to the first quarter,” Murphy said in a note, adding that while guidance for fiscal 2025 was raised, it still implies a slowdown in the second half of the year.
The “key hopes” in Snowflake’s results include solid bookings driven by accelerating RPO growth “with the closing of two nine-figure deals in the second quarter as well as continued subtle stabilization in DBNR (dollar net retention) trends,” the analyst wrote. The pace of sequential DBNR contraction moderated for the fourth consecutive quarter, he added.
Check out other analysts’ stock ratings.
Needham To Snowflake
Analyst Mike Cikos reiterated his buy recommendation, but lowered the price target from $210 to $160.
Snowflake’s product revenue of $829.3 million represented 30 percent year-over-year growth and was higher than the consensus of $813.7 million, Cikos said. Gross and operating margins were also higher, he added.
While Snowflake beat its forecast and sales expectations for the July quarter, shares fell as investors expected stronger revenue growth for the October quarter and an increase in operating margin guidance, the analyst noted.
“We believe investors are further confused by management’s decision to raise fiscal 2025 revenue guidance by 2% over current quarter guidance while not raising last quarter’s guidance due to the larger 5% overachievement,” Cikos said.
Although net revenue retention continued to decline, falling to 127% from 128% in the previous quarter and 142% in the year-ago period, RPOs accelerated for the third consecutive quarter and total customers increased, the analyst said. Snowflake raised the midpoint of its full-year product revenue forecast by $56 million but maintained its profitability forecast, the analyst added.
Goldman Sachs On Snowflake
Analyst Kash Rangan reiterated the buy recommendation and the price target of $220.
Snowflake reported solid quarterly results, but guidance fell short of high expectations, Rangan said. The stock came under pressure because operating and free cash flow margins “did not exceed expectations” and there was a “growing discrepancy between cRPO/RPO and future revenue growth,” he added.
“Snowflake’s genuine beat and increase on expectations in a still constrained spending environment underscores the stability of consumption and optimization trends through mid-August,” the analyst wrote. The company’s NNR “showed the lowest sequential deceleration rate in the past two years,” he further explained.
SNOW price promotion: Snowflake shares were down 13.5% to $116.71 at the time of publication on Thursday.
Read more:
Market news and data provided by Benzinga APIs
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
