Monness Crespi Hardt downgrades 'overvalued' Snowflake

Monness Crespi Hardt downgraded Snowflake Inc . (NYSE: SNOW ) to a Sell rating (From Neutral) and issued a 12-month price target of $160.00 on the stock.

Taking advantage of an exuberant tech market surge in late 2023 and leveraging the unparalleled hype around AI, Snowflake has seen a significant rebound in the past few months, leading analysts to the conclusion that the cloud data company has become “overvalued and vulnerable to selling pressure”.

Snowflake has witnessed a slowdown in revenue growth for eight consecutive quarters, marking a notable decline not only in the duration but also in the extent of this deceleration. For instance, from a peak growth of 110% in the prosperous period of 3Q:FY22, it has declined sharply to a mere 32% growth in 3Q:FY24.

Snowflake also holds the unflattering distinction of generating the lowest operating margin among Monness Crespi Hardt's enterprise software coverage, recording a 9.8% operating margin in 3Q24. The next three lowest operating margins were reported by Twilio at 13.2%, Elastic at 13.3%, and PagerDuty at 13.8%.

Shares of SNOW are up 0.86% in mid-day trading on Thursday.