Investment firm Wolfe Research initiated coverage of data warehousing giant Snowflake (NYSE:SNOW) with an outperform rating, seeing about 40% upside to SNOW stock from current levels.
Analyst Alex Zukin set a $250 price target for SNOW stock, a massive bump from current levels. Zukin believes that the company is growing at a significantly quicker pace than Amazon’s (NASDAQ:AMZN) Amazon Web Services did at the same scale. Moreover, he remarked how Snowflake has the top management team in the software industry.
Furthermore, he also feels that investors are somewhat ignoring that the company could potentially generate free cash flow margins of over 20% in 2023 and 2024 and free cash flow growth of 60% on a year-over-year basis. Hence, impeccable growth numbers and its incredible management team warrant a premium multiple.
Analysts at Refinitiv are looking at even a bigger upside to SNOW stock. The average price target of $315.03 based on 30 analyst recommendations points to almost a 77% upside from current levels.
Snowflake has become one of the premier enterprise software providers, experiencing record levels of growth. For instance, product sales rose 102% during the fourth quarter to $360 million. Moreover, the net retention ratio is at a record high of 178%. The company’s loyal customer base continues to grow with every quarter.
SNOW has had a torrid time in the stock market, along with several high-performing tech stocks. However, it has cleared much of the froth in its valuation, presenting a more attractive picture for investors. SNOW stock has shed over 45% of its value, which makes it significantly more investable at current prices.
On the date of publication, Muslim Farooque 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