Snowflake (SNOW) shares are recovering some of their recent losses ahead of the software firm’s pivotal earnings announcement scheduled for Feb. 25 after market close. Analysts believe SNOW will report a 27% year-over-year increase in revenue to $1.25 billion and a significantly narrower loss of $0.65 a share for its fourth-quarter results.
Still, there’s reason to remain on the sidelines with Snowflake. The stock is currently down more than 30% versus its year-to-date high.
Where Options Data Suggests Snowflake Stock Is Headed
Despite the ongoing software rout triggered by Anthropic’s recent launch of new AI capabilities, options traders seem to believe SNOW stock will push higher after earnings on Wednesday.
The put-to-call ratio on contracts expiring Feb. 27 sits at 0.54x currently, suggesting a bullish skew, with the upper price of about $177 signaling over 10% upside from here by the end of this week.
This positive view is substantiated by Snowflake's relative strength index (14-day), which is now hovering around the “oversold” territory, indicating bearish momentum is approaching exhaustion.
Moreover, a price-to-sales (P/S) multiple of about 12x no longer appears stretched, given that SNOW is a fast-growing tech stock.
Rosenblatt Maintains a ‘Buy’ Rating on SNOW Shares
Rosenblatt Securities’ analyst Blair Abernethy agrees with options traders on Snowflake shares. In a research note dated Feb. 24, he reiterated the NYSE-listed cloud-based data platform company at “Buy,” maintaining his price target at $275, indicating potential upside of more than 70% from here.
According to Abernethy, SNOW’s strategic expansion into the artificial intelligence data cloud and the “rapid snap back” in consumption trends underpin a significant valuation disconnect.
Snowflake is worth investing in, as it’s successfully transformed from a storage provider into an essential AI engine, with a solid net revenue retention (NRR) of 125%, he added.
How Wall Street Recommends Playing Snowflake
Other Wall Street firms seem to agree that the recent selloff in Snowflake has gone a bit too far.
According to Barchart, the consensus rating on SNOW shares remains at a “Strong Buy,” with the mean target of about $265 signaling potential for a more than 65% rally from current levels.
This article was created with the support of automated content tools from our partners at Sigma.AI. Together, our financial data and AI solutions help us to deliver more informed market headline analysis to readers faster than ever.
On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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