AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
_09_03_2024_01_03_36_873870.jpg)
Investing.com -- Oppenheimer analysts reaffirmed Snowflake (NYSE:SNOW) as a top pick for 2025, driven by strong expectations for the company’s performance and strategic growth initiatives.
The firm raised its target for the stock to $200 from $180 a share.
The bullish outlook is based on several key factors that position Snowflake for potential outperformance.
First, Oppenheimer highlights a favorable setup for FY26, with an initial guide to consensus that could see slight upside.
The analysts anticipate a "beat-and-raise cadence" throughout the year, fueled by the launch of new products and increased AI workloads, particularly Snowpark, Dynamic Tables, and Cortex.
The innovations are expected to drive higher consumption and bolster Snowflake’s revenue growth.
Second, they note that there is a shift in perspective regarding Iceberg expectations.
Oppenheimer explains that while there were earlier concerns about potential lost storage revenue in FY25, it now views Iceberg as a tailwind heading into FY26.
The analysts believe it will significantly contribute to consumption growth, enhancing Snowflake’s revenue streams.
Additionally, the growing momentum in Cortex and AI is seen as a critical driver. As cloud and large language model (LLM) independence gain traction, Oppenheimer believes customers are increasingly incentivized to build applications on Snowflake’s platform, leveraging its robust capabilities in handling AI workloads.
Lastly, Oppenheimer notes the potential for operating margin expansion. With investment levels expected to normalize after a period of increased spending in FY25, there is room for improved profitability.
“Net, we see good support for improving consumption with room for upside from new products, expanding AI use, and better margins,” concluded Oppenheimer.
