We initiate coverage on Snowflake (SNOW) with a Hold rating and a price target of $249. Despite our relatively bullish stance on the enterprise data warehouse (EDW) space, we think a level of caution is warranted due to the general excitement surrounding the stock.
SNOW’s differentiated product and sales strategy remain attractive but suspect competitive advantages could erode in the coming years. We have included key metrics that investors should monitor around growth, scale, and selling efficiency.
Lower Sales & Marketing (S&M) will be vital to posting profitability—we expect SNOW to stem operating losses and transition to profitability by FY 24 at the earliest.
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