After the market closed Wednesday, Snowflake (SNOW 3.69%) published results for the fourth quarter of fiscal 2024 (ended Jan. 31). While the company posted sales and earnings results that came in ahead of Wall Street's expectations, investors weren't happy.

Not only did Snowflake's forward guidance raise concerns, but the data-warehousing specialist announced that CEO Frank Slootman had retired and been replaced in the role by Sridhar Ramaswamy -- the company's former Senior Vice President of AI. Analysts responded to the performance outlook and management shakeup with a flurry of ratings downgrades and price-target cuts.

Following the earnings release and conference call, Morgan Stanley downgraded its rating on Snowflake from "overweight" to "equal weight." The firm also lowered its one-year price target on the stock from $230 per share to $175 per share -- representing a 24% cut from its previous forecast.

Why Morgan Stanley is right about Snowflake stock

The sudden departure of a highly capable and well-liked CEO tends to startle investors, and it's not surprising that analysts at Morgan Stanley and other high-profile Wall Street firms are reacting negatively to the news. Slootman had served as Snowflake's CEO since 2019 and guided the company through a successful initial public offering (IPO) and rapid business expansion.

Ramaswamy may prove to be a fantastic chief executive, but Wall Street typically doesn't like sudden change when it comes to corporate management -- and for good reason. Unexpected CEO shifts often signal internal issues at a company and can sometimes portend major challenges or strategic shifts on the horizon. Whether that's the case with Snowflake remains to be seen, but it's not unreasonable that Morgan Stanley's analysts factored Slootman's exit into their price-target reduction.

Still, investors should keep in mind that Morgan Stanley's recent coverage and price-target reduction only reflect a one-year view of the stock. It's entirely possible that the data-warehousing specialist will go on to deliver results showing that the concerns currently surrounding the company were overblown.