Bullish note vandaag voor Snowflake:
$SNOW Wolfe Research Starts at Outperform PT $250
“So how do we pitch a stock that is tied for the 3rd most expensive revenue multiple in SaaS and is down almost 50% YTD? We start by getting very excited about the potential for
meaningful revenue outperformance (we built a killer waterfall model that calls for ~50% growth in CY24), then we built a realistic FCF upside model where our $250 PT (44% upside) is based on a CY24 FCF multiple (~69x) roughly in-line with the ~60% FCF growth in that year, and we try to get out ahead of the company's Analyst day, which we view to be a major catalyst.
We see the potential for SNOW to become the 4th hyperscaler (it is growing faster than AWS at the same size and scale) with
the best management team (if you haven't' read Amp It Up, we HIGHLY recommend it) in software,
coupled with a best-in-SaaS product that is so good it turned AWS from a #1 competitor into its top-selling partner (selling $1.2B in bookings in the last year) and
spurring multiple VC's (we spoke with three) to fund companies built natively on its platform. This last point was one of the most impactful learnings from our diligence, which we believe creates an important durable structural growth driver and competitive advantage that is not well understood. The other thing that isn't well understood is that while the sky-high revenue multiple is often the first thing investors notice when doing work on the company, this is about to become a FCF story. We have gone to great lengths to build a model with realistic FCF upside, and we believe investors can get comfortable with 22%/24% FCF margin in CY23/CY24 (FCF growing 60% Y/Y in CY24).
From a valuation perspective SNOW is trading almost at its 2 year low vs. vs peers at 16.5x/11x upside CY23/CY24 EV/Sales on upside, above Heavyweight Growth comps at 14x CY23 EV/Sales. For context SNOW is trading at the same multiple that PLAN just got acquired by PE for if we look out an extra year. Given the high growth, stellar management team, and FCF support, we believe SNOW warrants a premium multiple, and launch with an Outperform rating and $250 price target. For those looking to "top-grade" software portfolios, we think that asset is SNOW and the time is now."
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Terwijl ik Snowflake voor lange tijd ook te duur vond, staan ze nu veel te laag. De markt overreageert altijd, zowel naar boven als naar onder. Mijn Koersdoel: 800$ eind 2026.
