Overview
Morgan Stanley has reiterated an Overweight rating on Snowflake Inc. (NYSE: SNOW) and maintained a $299.00 price target, despite recent downward pressure on the shares. Snowflake is currently trading at $211.27 and carries a market capitalization of $72.3 billion. Over the last 12 months the stock has returned 20.37%, according to InvestingPro data.
Analyst view and investor concerns
In its analysis, Morgan Stanley points to continued solid demand as the underlying support for its stance. That said, the bank underscores two focal investor worries: uncertainty about how large Snowflake’s fourth-quarter product revenue beat could be, and questions around the company’s opening guidance for fiscal year 2027. InvestingPro research shows that Snowflake is trading above its Fair Value and that analyst price targets span a wide range - from $170 to $500 - reflecting divergent views on growth prospects.
Quarterly growth signal and upcoming earnings
Morgan Stanley also highlights management’s guidance indicating quarter-over-quarter expansion for Q4 at levels not seen in four years. The firm contrasts that with a historical pattern in which Q4 has tended to produce the smallest beats versus consensus on average since the post-zero interest rate policy period began to change. Investors should note Snowflake’s next scheduled earnings release is on March 4.
Profitability outlook
Snowflake is not profitable on a trailing twelve-month basis, but analysts tracked by InvestingPro expect the company to reach profitability this year. This expectation is among the insights compiled in Snowflake’s Pro Research Report on InvestingPro.
Fiscal 2027 expectations and valuation
Consensus estimates for fiscal 2027 currently project product revenue of roughly $5.546 billion, which represents growth of just under 25% relative to current FY26 estimates. Morgan Stanley characterizes the FY27 outlook as "not a lay-up," yet it does not view consensus numbers as out of reach. Snowflake’s recent reported revenue growth of 28.48% is noted in the analysis, though the company continues to trade at a premium revenue multiple.
Competitive dynamics and growth trends
The research highlights a deceleration in product revenue growth from 32% in Q2 to 29% in Q3, while also indicating that Snowflake’s competitive position appears to have strengthened compared with late 2023 through the first half of 2024. The analysis stresses the evolving competitive dynamics within the data infrastructure market as a key variable for future performance.
Strategic acquisition
In a strategic move, Snowflake announced its intent to acquire Observe, a company positioned in AI-powered observability. The deal is intended to bolster Snowflake’s capabilities within the IT operations management software market, which the article places at a value above $50 billion. Snowflake says the acquisition will enable it to offer AI-powered observability solutions built on open standards by integrating Observe’s platform into Snowflake’s AI Data Cloud.
Other analyst activity
Market commentary on Snowflake shows a range of opinions. Barclays downgraded its rating from Overweight to Equalweight and lowered its price target to $250.00, citing limited upside. Goldman Sachs has initiated coverage with a Buy rating and a $286.00 target, highlighting potential growth from cloud RDBMS migrations accelerated by AI. Separately, Argus upgraded Snowflake from Hold to Buy and set a $300.00 price target, viewing the recent share price pullback as creating an attractive entry point. These divergent analyst moves underscore a split view on Snowflake’s near-term upside and longer-term market positioning.
Takeaway
Overall, Morgan Stanley’s reiteration reflects confidence in demand trends and a view that consensus fiscal 2027 product revenue targets are reachable, even as the market wrestles with uncertainty around the size of an imminent quarterly beat and the initial FY27 outlook. Analyst valuations vary widely, investors face both valuation and guidance-related questions, and strategic moves such as the Observe acquisition are intended to strengthen Snowflake’s product offering in a competitive, AI-driven data infrastructure landscape.
Important dates and data points (as reported)
- Current share price: $211.27
- Market capitalization: $72.3 billion
- 12-month return: 20.37%
- Morgan Stanley price target: $299.00
- Analyst target range: $170 to $500
- Next earnings report: March 4
- Consensus FY27 product revenue projection: ~$5.546 billion
- Recent revenue growth: 28.48%