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Snowflake (NYSE:SNOW) shares are indicated to open nearly 5% higher Thursday after JP Morgan upgraded the stock to Overweight citing a “surge” in their most recent CIO Survey.
Analyst Mark Murphy upgraded the stock while maintaining his $165 price target, which suggests ~30% upside from Wednesday’s close. The analyst notes shares are down ~68% year-to-date, versus a ~20% decline for the S&P 500 and are now just slightly above its September 2020 IPO price of $120.
Murphy notes Snowflake has an excellent standing among customers and notably, its standing surged to elite territory in their annual CIO Survey for 2022, which polled 142 CIOs controlling >$100B of IT spend.
Snowflake ranked #1 in installed base spending intentions and disproportionately #1 among emerging companies whose vision most impressed respondents.
Further, they are “incrementally confident” that the company is reaching an inflection point in terms of material FCF generation, and think that trendline has the potential to surprise positively, “creating the initial framework toward FCF-based valuation support.”
“Net-net, we believe Snowflake is benefiting from demonstrable secular tailwinds illustrated quantitatively and qualitatively in our CIO Survey while also exhibiting an Elite Rule-of-79 and positive cash flow for FY23 based on JPMe, setting up an attractive risk/reward dynamic, in our view,” the analyst concluded.
