UBS cuts Snowflake shares amid downbeat revenue guidance

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UBS cuts Snowflake shares amid downbeat revenue guidance
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On Thursday, UBS revised its price target on Snowflake Inc . (NYSE: NYSE: SNOW ) shares, reducing it to $185.00 from the previous $225.00, while maintaining a Neutral rating on the stock.

The adjustment follows a disappointing quarterly report from the cloud-based data-warehousing company, which revealed a lower-than-expected forecast for fiscal year 2025 product revenue growth and other concerns.

The company's stock experienced a 20% decline in after-market trading as it reported product revenue growth guidance of 22% for FY25, which falls short of the anticipated 28% target by investors.

The recent quarter also saw the exit of Snowflake's CEO, who was succeeded by the founder and CEO of Neeva, a company Snowflake acquired last year. Additionally, Snowflake's operating margin (OM) guidance was set at just 6%, and there were indications that usage and consumption trends did not improve in December and January as anticipated.

UBS's revised revenue estimates suggest that the calendar year 2024 revenue multiple of 18 times is excessively high for Snowflake, considering it too high for a 25-30% growth story.

The firm's analysis also points to new shifts in the data architecture market that Snowflake is facing.

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