Wolfe Research Downgrades Snowflake Inc. (SNOW) to Peerperform on competitive headwinds

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(Updated - May 26, 2023 7:42 AM EDT)

Wolfe Research analyst Alex Zukin downgraded Snowflake Inc. (NYSE: SNOW) from Outperform to Peerperform, citing less conviction in near and long term growth and growing competition from MSFT & Databricks creating incremental execution headwinds.

The analyst commented, "When we launched coverage in April 2022 (SNOW +1.9% vs. IGV +0.8% until FQ1 earnings) with an OP rating and $250 PT, we were upbeat on SNOW having the best management team in software, best product, and best growth rate (potential ~50% revenue growth in CY24). While we still see all the above as possible, the current valuation does not leave much room for error, all while the macro has worsened, the competitive landscape has changed, and the growth outlook is very different. Deteriorating expansion and consumption trends opens a debate around whether SNOW can even grow 30% in CY24 following the second consecutive FY24 guidance cut to 34% product revenue growth, down from 47% initially (F1Q24 earnings recap here). While the new guide appears beatable, it does not account for incremental deterioration of trends which we believe is possible as May consumption was below plan, and we have yet to see bookings deteriorate from large enterprises in North America."

For an analyst ratings summary and ratings history on Snowflake Inc. click here. For more ratings news on Snowflake Inc. click here.

Shares of Snowflake Inc. closed at $177.14 yesterday.

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