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Snowflake Falls on UBS Downgrade, Opened Negative Catalyst Watch at Citi

Stock Markets Aug 16, 2022 08:30AM ET
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© Reuters. Snowflake (SNOW) Falls on UBS Downgrade, Opened Negative Catalyst Watch at Citi
 
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By Senad Karaahmetovic

Shares of Snowflake (NYSE:SNOW) are down 3% in premarket Tuesday after analysts expressed caution heading into the Q2 earnings print.

A UBS analyst downgraded shares to Neutral from Buy with a price target of $175 per share, up from $165. The downgrade call comes after he conducted field checks with SNOW’s partners and customers.

“This round of field checks felt like a tone downtick relative to prior rounds, with more customers flagging efforts to curtail discretionary data analytics spend. With the stock +49% since mid June, we’d prefer to move to the sidelines near-term and hence take our rating to a Neutral from a Buy,” the analyst said in a client note.

Overall, the UBS analyst sees a “less-favorable set-up given the macro headwinds.” Especially concerning is the company’s customer profile, which “includes a number of emerging tech/internet firms and pandemic beneficiaries that may be moderating spending growth.”

Elsewhere, a Citi analyst opened a negative catalyst watch on SNOW shares as he sees growing usage challenges. Similar to the UBS analyst, he also mentioned “somewhat mixed” intra-quarter checks amid a slowdown in the cloud and IT spending.

“We see usage headwinds continuing to build, with consensus numbers too high (Q3 and FY24). Snowflake is a good bull market stock as consumption patterns can be levered to new line-of-business use cases such as marketing, but we are worried these make it less defensive/resilient in a more challenging backdrop,” the analyst said in a client note.

Still, the Citi analyst remains Buy-rated with a $175 per share price target.

Snowflake Falls on UBS Downgrade, Opened Negative Catalyst Watch at Citi
 

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Joe Rizzuto
Joe Rizzuto Aug 16, 2022 9:01AM ET
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another ridiculous call .. downgrades the stock but raises it's price target. smh
 
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