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Jefferies Moves Snowflake to Buy as Valuation is ‘Back to Reality’

2022.06.28 19:51

Jefferies Moves Snowflake to Buy as Valuation is 'Back to Reality'
Jefferies Moves Snowflake to Buy as Valuation is ‘Back to Reality’

Jefferies analyst Brent Thill upgraded shares of Snowflake (NYSE:SNOW) to Buy from Hold after a major pullback in the high-growth stock in recent months.

Thill also hiked the price target to $200.00 per share from $125.00 to reflect “continued execution on the platform expansion story.”

The analyst also urged investors to “stick with the story over the long-term given its large end markets and plenty of room to double its value while growing into a reasonable multiple.”

“We are upgrading SNOW after a significant compression on its multiple in the last 6-8 months, in part driven by a broader sector drawdown and by continued execution and strength in top-line growth,” Thill wrote in a client note.

The analyst highlighted best-in-class fundamentals, large and growing end-markets, high-quality growth, and “back to reality” valuation.

“We believe current valuations offer an attractive entry point for the stock given its long-term targets. The stock price has declined significantly in recent months, down 63% from its 52-week high and down 57% YTD vs. the IGV down 29%. Its multiple has gone through a sizable contraction over the past few months and now trades at 16x EV/CY23E rev on 54% growth (NET 13x on 36%, DDOG 16x on 37%, ZS 16x on 36%). The co recently reaffirmed its CY28E rev target of $10B, implying a 26% 7-year CAGR which we believe to be very achievable on conservative assumptions,” Thill added.

Snowflake shares are up 3% in pre-market Tuesday.

 

Jefferies Moves Snowflake to Buy as Valuation is ‘Back to Reality’

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