Snowflake Positioned for Long-Term Growth Despite Near-Term Headwinds
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Snowflake has strong growth prospects, with management targeting 30%+ revenue growth annually into 2029 in a large and expanding total addressable market.
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Snowflake is gaining market share among enterprises and expanding its product usage and capabilities, which along with an innovative usage-based pricing model creates operating leverage.
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Profitability is improving steadily, with gross and operating margins expanding thanks to economies of scale. Management targets 25% non-GAAP operating margin by 2029.
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Near-term headwinds of slowing net revenue retention and remaining performance obligations growth could spark some volatility, but long-term growth narrative still intact.
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Valuation looks stretched short-term, but over a 5-year horizon the stock appears attractively valued given durable growth prospects. Upside potential of at least 20%.