Analysts Heavily Bullish on Underperforming Cloud Giant

SNOW has a slew of optimism coming in from analysts

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Snowflake Inc. (NYSE:SNOW) is a cloud computing–based data warehousing company that enables organizations to mobilize their data. SNOW's Data Cloud allows customers to unite data, discover and securely share data, and execute diverse analytic workloads. Thousands of customers across varying industries, including 241 of the 2021 Fortune 500 and 488 of the 2021 Forbes Global 2000, use Snowflake Data Cloud for their businesses. At last check, SNOW was trading up 6% at $232.87.

On March 17, the cloud storage company announced the launch of their Healthcare & Life Sciences Data Cloud. With the Healthcare & Life Sciences Data Cloud, Snowflake offers healthcare companies a single, integrated, and cross-cloud data platform that eliminates technical and institutional data silos, allowing organizations to securely centralize, integrate, and exchange critical and sensitive data at scale.

Snowflake stock has decreased about 30% year-to-date and is currently down 42% since peaking at an annual high of $405.00 in November. Additionally, Snowflake stock has tacked on 34% from its all-time low of $164.29,  which it bottomed out at just earlier this month.

Moreover, the company holds a solid balance sheet with $3.85 billion in cash and only $206.3 million in debt, placing the business in a great position as SNOW continues to expand.

However, the biggest issue with Snowflake stock is their valuation. At an extremely high price-sales ratio of 54.73, SNOW has already priced multiple years of growth. This makes it difficult to justify its price for any investors with less than a 5-year outlook due to many uncertainties, and, with their revenues now at 10 figures, SNOW has begun to see a slow down in their growth rate, despite the percentage remaining high. Nonetheless, Snowflake stock would become an appealing option once again as a long-term play should it return near its 52-week low.

Short interest has been surging on SNOW, up 41% during the most recent reporting period. This accounts for 2.7% of the stock's total available float, or nearly two days' worth of pent-up buying power.

Lastly, analysts remain extremely optimistic. Heading into today, 13 of the 19 covering brokerage firms sport a "strong buy" recommendation. Should this optimism begin to unwind, Snowflake stock could be in for a round of downgrades.

 

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