Snowflake is due for a rebound even in a slowing economy, according to investment firm Baird. Analyst William Power initiated coverage of Snowflake with an overweight rating, saying in a note to clients on Tuesday night that the tech company’s growth path and fundamentals were too good to pass up. “Driven by strong growth from new and existing customers … we forecast F23 revenue growth of 66% and 49% in F24. … Notably, SNOW is already generating meaningful [free cash flow]. We acknowledge the rich valuation and recession risks, but are positive on the long-term value creation opportunity, though would also be more aggressive on pullbacks,” Power wrote. Snowflake is finding good traction in signing large global companies as customers, and that should continue going forward, Baird said. “We expect growing customer workloads to remain a strong long-term driver, though we’d noted that consumption could slow at least on the margin near-term for customers whose core businesses might face greater economic pressures. However, we expect broad growth trends to largely overwhelm any modest slowdown on that front,” Power wrote. Snowflake, like many other high-growth tech stocks, has struggled mightily in 2022. Its shares are down 57% year to date, and more than 60% from its highs last November. Baird set a price target of $200 per share for Snowflake, which is more than 37% above where the stock closed on Wednesday. Snowflake was not the only tech stock that Power recommended this week. Baird also initiated coverage of MongoDB with an overweight rating on Tuesday evening. — CNBC’s Michael Bloom contributed to this report.
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