The Easy Gains in Snowflake May Already be Gone

SNOW stock - The Easy Gains in Snowflake May Already be Gone

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Snowflake (NYSE:SNOW) stock is up 45% from the 52-week low it reached in mid-March. However, if you didn’t get in on SNOW stock at that low price, future growth may be tough to come by. In the last week, the company has received one analyst downgrade and an additional two analysts have lowered their price targets for the stock.

The concern for investors is that in two of these cases, the price target for SNOW stock is at or below the current consensus price target. And since the company reported earnings in early March, more than a dozen analysts also lowered their price targets. While many of these price targets remain well above the stock’s current level, there’s reason for caution.

Snowflake has been controversial since its initial public offering (IPO) in 2020. At an IPO price that was more than double its expectation, SNOW stock has had its detractors from the jump. And many of these detractors were taking victory laps when the stock plunged as part of the tech sell-off in late 2021. On the other hand, Warren Buffett has endorsed the stock. And investors are looking for growth wherever they can find it. The company has achieved both sequential and year-over-year growth in both earnings and revenue. However, that growth has been slowing in recent quarters.

Like many big data companies, Snowflake is attempting to increase its value by adding to its product line. The company recently launched its Healthcare and Life Sciences cloud offering. This has some investors excited about the company reigniting its growth. However, with uncertainty surrounding the economic outlook for the remainder of the year, it’s unclear as to how much growth is possible.

SNOW stock may present short-term traders with a nice trade. In mid-March, the stock price broke past its 20-day simple moving average (SMA) and is trading near a level of resistance on the 50-day SMA. If the stock breaks this level, it may have further to run. If you own shares of Snowflake, you should hold them, but it’s difficult to advise you to scale your position at this time.

On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines. 

Chris Markoch is a freelance financial copywriter who has been covering the market for over five years. He has been writing for InvestorPlace since 2019.

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