Snowflake Stock Forecast: After JPMorgan upgrade, SNOW could explode further

Snowflake (SNOW) stock surged 12.4% on Thursday on the back of a prominent upgrade by JPMorgan analyst Mark Murphy. Murphy kept his $165 price target on the data warehousing software provider but moved his neutral rating to overweight.

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Snowflake Stock News: Upgrade brings all the boys to the yard

Murphy's biggest takeaway was that chief information officers at large companies find Snowflake irresistible and are likely to increase spending on more of Snowflake's software platforms. He said Snowflake has entered an "elite" realm, as multinational companies are beginning to rely on Snowflake as an essential part of their tech stack.

"Snowflake enjoys excellent standing among customers as evident in our customer interviews and recently laid out a clear long-term vision at its Investor Day in Las Vegas toward cementing its position as a critical emerging platform layer of the enterprise software stack," Murphy wrote in his note to clients.

JPMorgan ran a survey of 142 chief information officers in charge of a combined $100 billion in software spend and found that Snowflake came in first place for installed base spending intentions and among emerging companies with impressive visions. The investment bank analyst praised star CEO Frank Slootman and said positive free cash flows were on the horizon.

Snowflake stock plunged over 15% to $112.43 after reporting its Q1 earnings in late May.  The GAAP earnings per share (EPS) missed by just 2 cents, but the market was also worried about whether or not Snowflake could continue their breathtaking growth rate. Product revenue of $394 million was up 84% YoY in the quarter, and management said it would reach 71% YoY growth in the present quarter, which will be reported in August, and 65% for the year.

Snowflake Stock Forecast: SNOW must break above top line at $150

SNOW stock is now trading up near the top line of its descending price channel. If the market continue to be as optimistic as it has been of late, we think Snowflake stock may overtake the descending top line, which began back in November 2021. At present the top line is at or just below $150. A close above $150 will signal that the rally should continue. A bounce down off the top line may instead signal that SNOW needs to find more support and build a base.

SNOW appears to already have double bottomed between the $110 to $112 region though. It bounced off this price region on May 26 and again on June 13 and 14. The Moving Average Convergence Divergence (MACD) indicator is trending in the right direction but still remains close to -10. If SNOW can overtake $150, then $160 is the next range high showing resistance. Otherwise, pick it up when it graces $112 again.

SNOW daily chart