Snowflake (SNOW -3.82%) shares have soared 47% over the last six months at the time of this writing. Wolfe Research analyst Alex Zukin recently upgraded the stock to an outperform (buy) rating with a $235 price target, implying upside of 24% over the current $189 share price. The bullish call comes ahead of the company's fourth-quarter earnings report on Feb. 26.

The stock is not cheap after its price-to-sales multiple nearly doubled over the last few months. Here's what is fueling more optimism for Snowflake and whether it is reasonable to expect the stock to climb higher in 2025.

Is the stock a buy?

Several factors sent the stock down last year, including a CEO change, increasing competition, and lower revenue growth. However, Snowflake has continued to roll out new cloud products that are firming up demand. Snowflake Cortex, an artificial intelligence (AI) service that helps customers build new applications, is experiencing strong adoption.

Based on recent consumption trends, management raised its product revenue outlook for the full year. Product revenue grew 29% year-over-year in fiscal Q3, and full-year guidance calls for product revenue to show the same increase.

The improved outlook is reflected in the stock's valuation. The shares are now trading at 18 times trailing revenue, up from a price-to-sales (P/S) multiple of 11 in November.

For the stock to hit the analyst's $235 price target, Snowflake will have to meet Wall Street's consensus estimate for $4.43 billion in revenue next year and trade at the same P/S multiple. That would put the stock right around Wolfe Research's price target in the next year.

To sustain returns beyond 2025, Snowflake will need to continue innovating, and importantly, improve margins. Snowflake will have to balance investing to drive growth while improving earnings. Its net loss grew to top $1.1 billion on a trailing-12-month basis. With the shares already trading at a higher valuation, the stock looks more like a hold than a buy for long-term investors.