SNOW stock | D chart | Earnings Nov. 20 2024 | Breakout | IBD RS Rating - Wait to $168/share
Barron's article about SNOW and earning
Snowflake Stock Is a Buy Before Earnings, Analysts Say. Just Look at Palantir.
Nov 06, 2024, 1:08 pm EST
Snowflake stock rose on Wednesday after an analyst upgraded it on his confidence that the data-cloud company will grow from generative AI demand.
Midday, shares were up 2.8% to $119.78. The stock is down 40% this year; the S&P 500 is up 24%.
Brian White, of Moness, Crespi, Hardt & Co., raised his rating to Buy from Neutral with a $140 price target, which implies a 20% increase from the stock’s Monday closing price.
“Unsurprising to us, the gen AI propaganda of 2023 has proven to be a revenue illusion for the software complex in 2024,” White wrote in a research note. “However, we believe the industry, and Snowflake, will begin to derive incremental activity from this long-term secular trend over the next 12-18 months.”
The stock dropped 15% on Aug. 22 after the company reported second-quarter financials. Despite an earnings and revenue beat, shares tumbled on a squeeze to operating margins.
Snowflake is scheduled to report third-quarter earnings on Nov. 20,
The stock’s drop this year provides an attractive entry point because the company can keep growing, White wrote.
Louie DiPalma, an analyst with William Blair, has an Outperform rating without a price target. On Tuesday, he wrote that Snowflake is software company Palantir’s closest competitor.
DiPalma has a Underform rating on Palantir, which just posted stronger-than-expected financials for its third quarter. Those results, coupled with the stock drop, could be a good omen for Snowflake coming into earnings.
“Palantir is trading at a $118 billion market capitalization, compared with Snowflake’s $38 billion, though Snowflake has greater revenue ($3.5 billion compared with $2.8 billion for the current fiscal year) and is growing at a similar rate in the same data analytics end-market,” DiPalma wrote.
Write to Angela Palumbo at angela.palumbo@dowjones.com
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