Canaccord upgrades Snowflake, says pullback offers a big buying opportunity

It’s time to jump back on the Snowflake bandwagon, according to Canaccord Genuity. Analyst David Hynes Jr. upgraded the stock to buy from hold, saying in a note late Tuesday that the company’s long-term targets seem achievable. Snowflake sees product revenue ballooning to $10 billion and free cash flow margins expanding to 25% by 2028. “If we take management’s C2028/F2029 targets at face value … then SNOW shares are too cheap,” Hynes Jr. wrote. “What’s more, if our experience with this team is anything like it was during their tenure at ServiceNow, it’s quite likely that these targets are achieved as much as a year early, which would only amplify the returns.” “So we’re using the market-driven pullback to get more constructive on one of the highest quality names that we cover,” the analyst added. “It might not be perfectly linear from here, but we’re quite confident that SNOW will be worth more in the years ahead.” Canaccord’s comments came after a recent analyst day held by Snowflake, where the cloud company made a series of announcements, including the unveiling of Unistore . According to the company, Unistore lets businesses “build transactional business applications directly on Snowflake, run real-time analytical queries on their transactional data, and get a consistent approach to governance and security.” Snowflake shares have taken a beating this year, falling more than 66%, as growth stocks get battered amid rising interest rates. Higher rates hurt growth names especially hard because many of these companies depend on cheap money to grow their businesses. Still, Snowflake’s future looks promising as demand for its products and services remains healthy, Hynes Jr. said, making the stock an attractive buy.

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