Shares of software companies have been battered recently amid an increase in the rate of tapering and three potential rate hikes in 2022. As a result, high-growth stocks with long durations have been hurt as well. Indeed, Snowflake (NYSE:SNOW) has not been able to escape the damage. Snowflake stock closed today down more than 9% on no direct news.
Investors were pleased with Snowflake’s Q3 earnings report when the company reported results on Dec. 1. Shares subsequently climbed higher by 13%, powered by exceptional sales and strong revenue guidance. Revenue tallied in at $334.4 million, beating analyst estimates by an impressive 9.4%. Additionally, the company issued Q4 revenue guidance between $345 million and $350 million, which beat the FactSet consensus estimate of $315.9 million.
Furthermore, shares of Snowflake are up 16% year-t0-date (YTD), trailing the S&P 500’s return of 26% during the same period.
As a result of strong earnings, investors should expect bullish analyst price targets. However, it’s worth noting that shares of SNOW stock currently trade at a generous enterprise value to revenue multiple of 107X. This is by no means cheap, even when considering Snowflake’s high gross profit margins of 63.88%. On a positive note, gross profit margins have been growing steadily since Q1 of this year, which is a fantastic sign. Now, let’s take a look at where Wall Street believes Snowflake should be priced.
Snowflake Stock Price Predictions: Where Will SNOW Go Next?
- Credit Suisse recently raised its price target from $455 to $465. Analyst Phil Winslow was impressed by Snowflake’s third-quarter results, highlighting strong revenue growth and impressive operating margins. Winslow views Snowflake as a “true pioneer in cloud-native data analytics” that will play a significant role “across the entire data value chain.”
- Piper Sandler has a $397 price target. Analyst Brent Bracelin is bullish on potential developments and partnerships the software company may incur in the future. Bracelin’s price target represents an upside of 22% from current prices.
- Morgan Stanley has a $344 price target. Like Winslow, analyst Keith Weiss was impressed by Snowflake’s strong third-quarter results. However, Weiss’ price target is notably lower. Weiss expects compound revenue growth to be in the mid-30s range for the next decade and believes that projected growth is already priced into Snowflake stock.
- Finally, Snowflake has an average price target of $387.39 among 28 firms covering the stock.
On the date of publication, Eddie Pan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
