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Well-known data company receives downgrade from Wolfe due to macro outlook concerns

Wolfe downgrades this well-known data company on concerns over macro outlook

Wolfe downgrades this well-known data company on concerns over macro outlook

Snowflake Downgraded by Wolfe Research due to Changed Competitive Landscape and Market Overhangs

Data company Snowflake has seen its growth prospects reduced due to ongoing macro overhangs and a shift in the competitive landscape. Despite strong product offerings and management, Wolfe Research analyst Alex Zukin downgraded Snowflake shares to peer perform from outperform. Zukin removed his previous price target of $160, citing the current valuation leaving little room for error. Snowflake shares closed at $147.91 on Thursday.

While Zukin still regards Snowflake as having the best management team in software and the best software-as-a-service product, he noted a reduction in expected growth due to increasing competition from Databricks and Microsoft. Growth of large language models and generative AI applications are responsible for the shift in enterprise data storage and data infrastructure.

The market has responded with Snowflake shares dropping 0.6% before Friday’s trading bell, leaving shares up just 3% so far in 2023. Last year the stock recorded 16% gains. Zukin said he sought better visibility of near and long term growth at Snowflake’s current valuation.

FAQs:

What is Snowflake?

Snowflake is a cloud-based data warehousing company that provides software tools and services to businesses.

What led to the downgrading of Snowflake shares by Wolfe Research?

Ongoing macro overhangs and a shift in the competitive landscape led to a reduction in expected growth for Snowflake, prompting Wolfe Research to downgrade its shares to peer perform.

What was the previous price target for Snowflake shares?

Wolfe Research had previously set a price target of $160 for Snowflake shares.

What is the current value of Snowflake’s shares?

As of Thursday’s trading session, Snowflake’s shares closed at $147.91.

Wolfe downgrades this well-known data company on concerns over macro outlook
Wolfe downgrades this well-known data company on concerns over macro outlook

Wolfe reduces rating on prominent data firm due to apprehensions about macroeconomic prospects.

Data company Snowflake’s future is less certain due to ongoing challenges, according to industry experts at Wolfe Research. While the company has strong product offerings, analyst Alex Zukin says the current valuation does not leave much room for error, particularly given that macro overhangs have reduced the company’s growth expectations. Zukin downgraded Snowflake shares to peer perform from outperform and removed his price target, which was previously set at $160. Zukin also highlighted growing competition from rival companies such as Databricks and Microsoft. Despite this, Zukin still praised Snowflake’s management team and software-as-a-service product. The stock closed at $147.91 following Thursday’s trading. Shares are only up 3% this year, lagging behind the S&P 500.

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