Snowflake Melts Up as Analysts Shift Gears; Higher Prices To Come

Core Insights - Snowflake's Q3 results indicate a turnaround in sentiment, showcasing strong client growth and service penetration, reinforcing its leading position in data management [1][5] - Analysts have responded positively to the Q3 results, with many raising their price targets significantly, suggesting a potential upward movement in stock price [4][6] Financial Performance - Snowflake reported Q3 revenue of $940.09 million, reflecting a year-over-year increase of 28.3%, surpassing consensus estimates by nearly 500 basis points [5] - The company's largest client group grew by 25%, and the systemwide net retention rate stands at 127%, indicating robust client engagement despite a slight decline from the previous year [5] - The remaining performance obligation, a key indicator of future revenue, increased by 55%, equating to six quarters of business at the current growth pace [5] Analyst Sentiment - The consensus price target for Snowflake is $180.23, with a potential upside of 5.37%, and many analysts have set targets in the 20% to 30% range, indicating strong bullish sentiment [4][6] - The stock price surged over 30% following the Q3 results, with trading volume more than double the 30-day average, suggesting sustained interest and momentum [10] Future Outlook - Snowflake's guidance for Q4 and the full year is optimistic, with product revenue expected to grow by approximately 1% sequentially and 23% year-over-year [7] - A new deal with Anthropic is anticipated to drive growth in 2025, as it will enhance AI applications on Snowflake's platform, presenting a significant opportunity given Anthropic's expected $1 billion in annual revenue [8][9]