Shares of tech giant Snowflake (NYSE:SNOW) are starting 2025 on a comparatively strong note after a tumultuous year. The company, headquartered in Montana, is a leader in cloud data platforms. While 2024 was a challenging year for Snowflake, with shares dropping 55% into September, a rally of 45% heading into January suggests that investor confidence is beginning to return.
That said, there’s still a long road ahead for Snowflake to reclaim its former glory and win back Wall Street’s full confidence. However, with several recent analyst updates pointing to brighter days, there are reasons for investors to be getting excited about Snowflake stock as we move further into 2025.
Snowflake's Fundamental Performance
To start with, let’s take a look at Snowflake’s recent fundamental performance. Aside from a rare miss in May’s earnings report, Snowflake exceeded analyst expectations on the headline numbers in every other quarter of the year.
This was the case in its most recent earnings report in November, which saw a record revenue print - always a good sign that things are moving in the right direction. However, there’s no ignoring the fact that profitability has been elusive. Snowflake’s margins were squeezed in 2024 as costs rose, which left many investors questioning whether the company could hit consistent profitability anytime soon.
Still, it’s worth pointing out that much of the downside from these concerns may already be priced into the stock. Shares recently traded at all-time lows, so a solid performance in February’s report could be the catalyst needed to ignite the comeback rally.
Snowflake Receives Bullish Analyst Updates
Adding to this turnaround potential are the bullish updates coming in from Wall Street. Snowflake has already received three this year, which is no small feat, considering we’re not even halfway through the month.
In a note to clients in the first week of the year, the team over at Piper Sandler reiterated their Overweight rating, which was soon followed by a similar move from Wells Fargo. Then, just last Friday, Barclays upgraded Snowflake from Equal Weight to Overweight.
The price targets from all three updates range from $190 to $208, which, from where the stock closed on Friday, point to a targeted upside of nearly 30%. The optimism centers around what analysts describe as strategic advancements by Snowflake and an increase in the company’s full-year guidance. For those on the sidelines, these bullish calls highlight the growing confidence that Snowflake’s turnaround has already begun.
Concerns Over Valuation and Profitability Loom
It has to be acknowledged, however, that this is still a beaten-down stock that lost a lot of value last year while the broader market was trading at all-time highs. Its rally from last quarter is definitely taking a breather right now as investors try to get a sense of where equities are headed after the Fed’s latest update.
It’s also worth noting that not all analysts are convinced. December saw Wedbush downgrade Snowflake from Strong Buy to Hold, citing concerns over valuation and profitability. However, it’s important to keep in mind that Wedbush was one of the few bearish voices in a sea of bullish updates last month. Other firms, including Loop Capital, Jefferies, and Scotiabank, rated the stock a Buy or equivalent heading into 2025.
The Stage Is Set for More Gains
With a Relative Strength Index (RSI) of 52, the stock still can boast plenty of bullish momentum while at the same time having a ton of room to run higher if things take off. For context, the RSI is a technical indicator that measures a stock’s recent trading history and spits out a reading between 0-100. Readings above 70 typically signal overbought conditions, while readings below 30 indicate oversold territory. With Snowflake’s RSI comfortably in the middle, the stage is set for further gains if buying activity picks up.
Snowflake’s mix of solid fundamentals and strong analyst support suggests this could very well be the case in the coming month. With so many reasons to be excited, Snowflake could be one of 2025’s most compelling comeback stories.