What happened
Shares of Snowflake (NYSE: SNOW) jumped 6.3% on Monday, following positive analyst commentary.
So what
Morgan Stanley analyst Keith Weiss upgraded his rating on Snowflake's stock from equal weight to overweight. He now sees the software star's shares climbing to $390, up from his previous forecast of $344.
If Weiss is correct, shareholders could enjoy gains of roughly 33% from Snowflake's current price near $293.
Image source: Getty Images.
Weiss expects Snowflake to continue to enjoy robust demand for its data warehousing services, as more businesses shift their operations to the cloud. Snowflake is adding new customers at a rapid clip, with its total customer count rising 52% year over year to more than 5,400 in the third quarter. It's also gaining new business from existing clients, as evidenced by its sterling net revenue retention rate of 173%.
Snowflake's successful land-and-expand strategy will help it produce free cash flow sooner than many investors expect, according to Weiss. Furthermore, Weiss notes that the stock's recent pullback is providing investors with an opportunity to buy shares at a more attractive valuation.
Now what
Snowflake offers highly regarded data management tools at a time when gleaning actionable insights from ever-growing amounts of cloud data is becoming more vital for businesses of all sizes. It's a booming market, one that could approach a staggering $90 billion, according to the company's projections.
That leaves plenty of room for expansion for Snowflake, which grew revenue by 110%, to $334 million, in the third quarter. It also makes Weiss' $390 stock price target entirely plausible.
Find out why Snowflake Inc. is one of the 10 best stocks to buy now
Our award-winning analyst team has spent more than a decade beating the market. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed their ten top stock picks for investors to buy right now. Snowflake Inc. is on the list -- but there are nine others you may be overlooking.
Click here to get access to the full list!
*Stock Advisor returns as of January 20, 2022
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns and recommends Snowflake Inc. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
