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on thursday, Snowflake Co., Ltd. . (NYSE:) The stock outlook has changed after HSBC analyst Stephen Varsey adjusted the company's rating and price target. Snowflake's investment rating was lowered from “buy” to “hold,” but the price target was slightly raised from $212.00 to $214.00.
HSBC's valuation of Snowflake is based on a price-to-earnings (PEG) multiple of 3.0x, which remains unchanged. This multiple applies to the company's next 12-month non-GAAP EPS estimate of $1.05, revised from the prior year estimate of $1.19 for fiscal 2025. The new price target considers a five-year non-GAAP compound annual growth rate (CAGR) of 67.8%, up from the previous estimate of 65%.
The analyst said the new price target of $214.00 suggests a downside of 9.3%. However, the downgrade to “maintain” rather than “reduce” reflects Snowflake's solid earnings momentum. Analysts believe the stock could benefit from increased adoption of artificial intelligence (AI).
HSBC has outlined several factors that may impact Snowflake's performance. Upside risks include the possibility that profit margins will exceed expectations, favorable macroeconomic and stock market conditions, and the possibility that new products will be more successful. Conversely, companies may face challenges due to an increasingly competitive environment or weaker-than-expected economic and market conditions.
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