Phillip Securities Upgrades Snowflake to Strong-Buy

Phillip Securities lifts Snowflake to "strong buy"

Phillip Securities upgraded Snowflake (NYSE:SNOW) to a "strong-buy" rating in a research note issued on Sunday, September 28, citing the company's AI Data Cloud growth prospects. The move positions Phillip Securities as one of only two firms now assigning Snowflake its top rating, according to data compiled by MarketBeat.

Wall Street consensus and price targets

The Phillip Securities upgrade sits within a broader "Moderate Buy" consensus covering 41 covering analysts: one Strong Buy, thirty-four Buy, five Hold, and one Sell, with an average 12-month price target of $414.24. Several firms raised their targets in early September following Snowflake's quarterly results, including Canaccord Genuity (to $450 from $325), Piper Sandler (to $450 from $320), TD Cowen (to $450 from $370), Citizens Jmp (to $488 from $408), Evercore ($430), and Mizuho ($425). Earlier in the year, KeyCorp lifted its objective to $325 on July 16 and Loop Capital raised its target to $320 on June 3, while Weiss Ratings reiterated a "sell (e+)" stance on September 8.

Earnings beat and revenue acceleration

Snowflake reported quarterly results on Wednesday, September 2 that exceeded analyst expectations. Adjusted earnings per share came in at $0.62, beating the $0.45 consensus estimate by $0.17, while revenue reached $1.55 billion versus the $1.48 billion estimate, a year-over-year increase of 35.1%. For the prior-year quarter, Snowflake had posted $0.35 EPS. Sell-side analysts on average project full-year EPS of -1.46 for the current fiscal year. The company had a negative net margin of 20.07% and a negative return on equity of 46.32% in the latest quarter.

Share price, valuation and capital structure

Shares opened at $328.33 on Friday, September 26, leaving the stock well below its 52-week high of $384.56 but above the 52-week low of $118.30. The 50-day simple moving average stood at $319.52 and the 200-day average at $238.69, with a market capitalization of $115.83 billion, a price-to-earnings ratio of -103.25, a beta of 1.33, and a debt-to-equity ratio of 1.06. Separately, Ticker Report's coverage flagged a recently priced upsized $3.75 billion private placement of 0.00% convertible senior notes, split into $2.0 billion due in 2029 and $1.75 billion due in 2031, intended to fund strategic initiatives including potential investments or acquisitions in the competitive AI-data market.

Insider selling and ownership profile

Despite the bullish analyst backdrop, insiders have continued to trim holdings. Chief Revenue Officer Jonathan Beaulier sold 755 shares on Wednesday, September 23 at an average price of $336.36, a transaction valued at about $253,951.80 that left him with 211,619 shares. Earlier, EVP Christian Kleinerman sold 25,000 shares on Friday, August 7 at an average of around $325. Over the trailing 90 days, insiders have offloaded more than $387 million in stock, while institutional investors own approximately 65.1% of shares outstanding.