Earnings Update: Here's Why Analysts Just Lifted Their Snowflake Inc. (NYSE:SNOW) Price Target To US$281

The investors in Snowflake Inc.'s (NYSE:SNOW) will be rubbing their hands together with glee today, after the share price leapt 63% to US$280 in the week following its first-quarter results. The results were mixed overall, with revenues slightly ahead of analyst estimates at US$1.4b. Statutory losses by contrast were 3.5% larger than predictions at US$0.86 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

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Taking into account the latest results, the most recent consensus for Snowflake from 48 analysts is for revenues of US$6.08b in 2027. If met, it would imply a major 21% increase on its revenue over the past 12 months. Losses are supposed to decline, shrinking 17% from last year to US$2.88. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$5.91b and losses of US$2.81 per share in 2027. So it's pretty clear consensus is mixed on Snowflake after the new consensus numbers; while the analysts lifted revenue numbers, they also administered a pronounced increase to per-share loss expectations.

See our latest analysis for Snowflake

The average price target rose 23% to US$281, even thoughthe analysts have been updating their forecasts to show higher revenues and higher forecast losses. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Snowflake analyst has a price target of US$500 per share, while the most pessimistic values it at US$110. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of Snowflake'shistorical trends, as the 29% annualised revenue growth to the end of 2027 is roughly in line with the 31% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 14% per year. So it's pretty clear that Snowflake is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Snowflake. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Snowflake going out to 2029, and you can see them free on our platform here.

Even so, be aware that Snowflake is showing 2 warning signs in our investment analysis , you should know about...

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.