“Cautious optimism.” That’s the phrase one analyst is running with for cloud computing stock Snowflake (NASDAQ:SNOW), and there are some sound bits of logic supporting such a conclusion. Whether or not you agree with the logic, however, investors are trending a bit more cautious than that, pulling 2% out of Snowflake’s value in Thursday afternoon’s trading session.
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The cautious optimism in this case comes out of Wells Fargo’s own Michael Turrin, who declared that Snowflake is looking a lot more like a “balanced setup” these days. It is still “tough to call any real turn,” Turrin pointed out, but the substantial share price decline that Snowflake has seen—about a 15% loss since last June—is doing wonders to put its risk-reward proposition back on proper track.That’s especially true with Snowflake’s second quarter numbers likely making an appearance next week.
There’s one other major development that contributes to Turrin’s thesis. Snowflake has apparently been in the market for a new headquarters location, and is shopping around. Two years ago, Snowflake withdrew from the Bay Area, dropping the “headquarters” label from its San Mateo location. That’s not too much of a surprise, given the general state of San Francisco these days. However, it’s not too much to keep Snowflake from coming back, as it’s said to be looking for over 200,000 square feet of office space again in the Bay Area. That’s going to take quite a bit of cash, even now, but Snowflake must have it ready.
Meanwhile, analysts are clearly on Snowflake’s side. With 25 Buy ratings, seven Hold and one Sell, Snowflake stock is considered a Moderate Buy. Further, with an average price target of $190.18, Snowflake stock comes with an upside potential of 29.54%.
