Snowflake Inc. (SNOW)

Mar 3, 2022Trade Ideas

Keep an eye on Snowflake Inc. (SNOW).

In pre-market, the stock is down $55 a share on guidance.

Earnings were solid.

According to Barron’s, “For the quarter, Snowflake posted revenue of $383.8 million, up 101%, and ahead of the Wall Street consensus forecast of $372.6 million. Product revenue in the quarter was $359.6 million, up 102%, and ahead of the company’s guidance range for $345 million to $350 million. Non-GAAP product gross margin was 75% in the quarter. Adjusted free cash flow was $102.1 million, or 27% of revenue.”

For its current quarter, SNOW sees product revenue of between $383 million and $388 million, which would be 79% to 81% growth year over year. It also expects to see an operating margin of -2%, as compared to 5% quarter over quarter. For the full year, SNOW sees product revenue of between$1.88 billion and $1.90 billion, which is short of expectations for $2 billion, with operating margin of 1%.

With the pullback, JMP analyst Patrick Walravens sees opportunity. Not only did he reiterate a market outperform rating on the SNOW stock, with a price target of $385, he noted:

“1) SNOW is disrupting the data management industry with its data cloud and cloud-native architecture; 2) the cloud data platform addresses an ~$90B TAM; 3) Snowflake is led by an A+ management team, including CEO Frank Slootman and CFO Mike Scarpelli; and 4) the company’s consumption model passes the benefits of platform enhancements to its customers, and while this dynamic impacts revenue at times, investors should understand that,” as reported by TheFly. com.

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