Shares of Snowflake (SNOW 1.15%) have fallen sharply since the data warehousing leader delivered its fiscal fourth-quarter report after the bell Wednesday. The former high-flier has also lost nearly half its value from the peak it hit in November.
Is Snowflake's swoon a sign that more pain lies ahead for shareholders, or is now an opportune time to invest in the cloud software star?
Let's see what some Wall Street analysts have to say.
Image source: Getty Images.
After the earnings report, Barclays analyst Raimo Lenschow cut his share price target for Snowflake from $367 to $313. Yet he reiterated his overweight rating on the stock. Lenschow acknowledged that Snowflake's fiscal fourth-quarter revenue and fiscal 2023 guidance fell short of investors' lofty expectations. However, he believes the sell-off has created an attractive buying opportunity for long-term investors that could generate returns of roughly 48% over the next 12 months, based on his reduced target price.
Evercore analyst Kirk Materne has a similar view. He slashed his valuation estimate from $400 to $344, yet he maintained an outperform rating on Snowflake. Materne argues that investors overreacted to management's conservative revenue outlook. He noted that the core drivers of Snowflake's cloud data business are sturdy, as can be seen in its solid customer growth and retention metrics. So although Materne thinks its stock price could decline further in the near term, he would view such a continued downturn as an opportunity to scoop up shares at a more attractive price.
Morgan Stanley analyst Keith Weiss dropped his price forecast from $390 to $355. Yet he, too, repeated his overweight rating on Snowflake. Weiss noted that the company's revenue growth was negatively impacted by its efforts to reduce costs for its customers. But he expects Snowflakes to win more business because of these initiatives. Thus, he encourages investors to consider building positions in Snowflake.
Is Snowflake a buy today?
Analysts are rightfully defending their bullish views on the cloud data giant. Traders may be reining in their short-term growth projections, but Snowflake's business fundamentals remain strong, and its long-term growth story is intact. Therefore, patient buy-and-hold investors may wish to seize the opportunity created by the stock's recent plunge to pick up this stock at a substantial discount to its recent highs.
