Analysts reset Snowflake stock price target after earnings

Hard times will always reveal true friends, as they say, and Sridhar Ramaswamy can certainly attest to that.

CEO of Snowflake (SNOW) has had an awful few days after the cloud storage and analytics company reported in May that it had been hit by a cyber attack.

Related: Analysts Revamp Snowflake Share Price Target After Earnings

“Nothing brings to life how strong and trusting a relationship is than when you go through challenges together,” Ramaswamy told analysts during the Bozeman, Mont., company’s Aug. 21 second-quarter earnings call. “Obviously we had some rough headlines in the quarter as some of our customers faced the cyber security threat.”

Google Cloud’s cybersecurity consulting arm, Mandiant, said in June that it had notified about 165 organizations that their data may have been exposed.

AT&T (T) was among those organizations. The telecommunications giant said in a July 12 regulatory filing that hackers stole six months of call and text records of nearly every customer of AT&T’s cellular network.

“Although the data does not include customer names, there are often ways, using publicly available online tools, to find the name associated with a particular phone number,” the company said.

Mandiant attributed the hack to a financially motivated group it calls UNC5537, with members in North America and Turkey.

Sridhar Ramaswamy, CEO of Snowflake

Snowflake/TheStreet

Snowflake CEO: “We’re all in this together”

The FBI, the US Department of Justice and the Federal Communications Commission are investigating the incident.

“As has been widely reported, the problem was not on Snowflake’s side,” Ramaswamy said during the call. “After multiple investigations by internal and external cybersecurity experts, we found no evidence that our platform was breached or compromised. However, we understand that when it comes to cybersecurity, we’re all in this together.”

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“My only requirement of all companies around the world, whether they’re a Snowflake customer or not, is to enable and enforce multi-factor authentication in your organization and make sure you have as strong network policies as possible, two things that I supported Snowflake. since 2016,” he added.

Snowflake CFO Mike Scarpelli said the impact of last month’s IT crowdstrike (CRWD) the outage, in which a botched update resulted in a massive global shutdown, was “minimal.”

“It was a day with a few customers, but nothing of substance,” he said. “And that never affected us.”

Snowflake reported second-quarter adjusted earnings of 18 cents per share, compared with 22 cents in the year-ago period. Analysts polled by FactSet had expected Snowflake to earn 16 cents per share.

Revenue totaled $868 million, up 29 percent from a year earlier and beating Wall Street’s call for $852 million in sales.

Ramaswamy reminded analysts of “many bright spots in the quarter,” with none more noteworthy than the time spent with more than 100 clients, “many of them on my travels to the UK, Germany, Canada and the US, and of course , a June Snowflake Summit.”

“The affinity for our product is incredible,” he said. “And the consistent theme I hear from the C-suite across all industries and geographies is that Snowflake brings ease, efficiency and reliability to their business.”

Snowflake shares were down 13% at last check to $117.39. Shares are down nearly 41% year-to-date and 23% year-to-date.

Bruce Kamich of TheStreet Pro analyzed Snowflake’s results and wrote in his August 22 column that “despite a battering, traders sold off the stock Thursday morning.”

— Will the low from early August be retested? he asked. “Maybe. Is this dip an opportunity to buy? It’s too early to tell. In general, charts and indicators are mixed with bearish ones, and traders should focus on other opportunities.”

Analysts are updating their price targets for Snowflake

Several analysts updated their price targets for the company following the earnings report.

Wedbush analyst Taz Koujalgi cut his price target on Snowflake to $140 from $210 and maintained a neutral rating on the stock.

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Snowflake’s second-quarter numbers beat Wall Street estimates/guidance for product revenue and margins, but the quarter-on-quarter product revenue dollar growth was less than the quarter-on-quarter dollar growth in the prior quarter, he said.

“Typically, the t/ta growth in product revenue has always been higher in a Q2 vs. Q1, and so this raises some questions about the slowdown in usage/consumption,” Koujalgi said.

Snowflake clarified that it saw no impact on consumption from security breaches reported during the quarter, and the impact of the CrowdStrike outage was minimal, the analyst told investors in a research note.

Bernstein cut his price target on Snowflake to $130 from $185 and affirmed an effectively neutral market perform rating on the stock after the company beat estimates and led weaker than Wall Street expected, the investment firm said.

However, the firm said the real issue was what it called a “disconnect” between the strength of remaining performance obligations and holding net income against guidance.

Additionally, the entire company and its AI strategies are “still hard to decipher, and new products are still too small to have a major impact on revenue next year,” the firm said.

Bernstein said the lack of clarity about what to expect from Snowflake continues.

JMP analyst ‘continues to like the story’

JMP Securities analyst Patrick Walravens lowered the company’s price target on Snowflake to $190 from $235 and kept an outperform rating on the stock.

Snowflake reported mostly strong quarterly results, but with a “weaker” pace of product revenue than it has reported in the past. And it has had to weather some “harsh headlines” as its customers tackle cybersecurity threats and data breaches, the analyst said.

Walravens said it still likes that story because the core business is driving significant customer value, reflected in 30% growth in product revenue, nine-figure customers and particular strength in the financial services and technology segments.

The company has increased its innovation and product delivery under Ramaswamy, who became CEO in February, with new products and capabilities such as Cortex, Managed Iceberg Tables, support for unstructured data and Notebooks, the analyst said.

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