- Following the release of third-quarter results and the announcement that product revenue for the following quarter would slow down, Snowflake stock ( NYSE:SNOW ) reversed earlier losses and increased by almost 3% in early trading on Thursday. This prompted several analysts to defend the data warehouse company.
Derrick Wood, a Cowen analyst who rates Snowflake as outperform but has reduced the stock’s price objective from $235 to $225, said the projection was “disappointing,” but that the company’s strength in larger companies could offer some protection.
The strength in large organizations, which is a more resilient cohort and essential to its [long-term] growth, pleased us even though the [fourth-quarter] forecast was somewhat disappointing, and Snowflake is not immune to macro conditions, Wood wrote in a note to clients.
Developments Around Snowflake Stock Outlook
Wood also mentioned that there is an opportunity for an “upside” to long-term goals and that free cash flow margins are still attractive given their upward trend.
The Frank Slootman-led Snowflake reported $557 million in sales for the three months that ended October 31, an increase of 67% year over year, including $522.8 million in product revenue. The majority of experts predicted that Snowflake will generate $538.91M in revenue and earn an adjusted 5 cents per share.
Snowflake stated that it anticipates product revenue to be between $535M and $540M in the upcoming quarter, representing a growth rate of 49% to 50% year over year, or significantly less than the 67% the business experienced in the third quarter.
Snowflake has stated that it anticipates adjusted operating margins to be 1% in the future quarter. ...
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