Shares of Snowflake Inc. (SNOW) plunged approximately 20% after the company reported its fourth-quarter financial results, issued guidance, and announced a CEO transition. The stock received a downgrade from Morgan Stanley and a lowered price target from Oppenheimer. These developments have sparked debates among analysts, with some expressing cautiousness about the company's conservative fiscal 2025 guidance while others remain optimistic about its future growth potential.

Morgan Stanley downgraded Snowflake's stock from Overweight to Equal-Weight following the Q4 report. Meanwhile, Oppenheimer analyst Ittai Kidron maintained an Outperform rating but lowered the price target from $240 to $220. Kidron acknowledged that Snowflake delivered a solid quarter, surpassing consensus revenue and EPS estimates, fueled by strong net revenue retention (NRR), new customer additions, and traction with large clients. However, the analyst expressed concerns about Snowflake's fiscal 2025 product revenue guidance, which fell below expectations. Additionally, the announcement of CEO Frank Slootman's departure raised questions about the company's future direction.

Despite these concerns, some analysts remain bullish on Snowflake's prospects. Canaccord Genuity analyst Kingsley Crane reiterated a Buy rating with an unchanged price target of $230. Crane highlighted several positive factors like record RPO (remaining performance obligations) growth and strong net retention rate at 131%. The analyst also commended Snowflake's new guidance philosophy, which introduces more prudence into the model. Crane believes that innovations in artificial intelligence (AI) and the availability of additional services could further boost the company's revenue.

However, not all analysts share the same level of optimism. Mizuho analyst Gregg Moskowitz reiterated a Buy rating but lowered the price target from $255 to $205. Moskowitz acknowledged that Snowflake's product revenue growth of 33% year-over-year beat expectations, but many were hoping for even stronger results. The guidance for fiscal 2025, which projected only a 22% growth, disappointed investors. Nevertheless, Moskowitz believes that the guidance appears conservative, leaving room for potential upside in the future.

Truist Securities analyst maintained a Buy rating but lowered the price target from $250 to $210. The analyst was disappointed with Snowflake's financial outlook but highlighted several positive drivers that make investors constructive at current levels. Truist Securities analyst also pointed out that the management team's outlook appeared to be significantly conservative.

Piper Sandler analyst Brent Bracelin maintained an Overweight rating and lowered the price target from $250 to $240. Despite the recent sell-off in Snowflake shares, Bracelin considers it an attractive entry point to own a prominent AI data platform with a high-margin revenue model. The analyst is optimistic about several upside levers in the second half of the year, which could stimulate consumption through the addition of new AI workloads.

Needham analyst Mike Cikos maintained a Buy rating but lowered the price target from $265 to $240. Cikos expressed surprise at Snowflake's fiscal 2025 product revenue guidance of only 22% growth, considering the sell-side forecast of 29% year-over-year growth. The analyst believes that the guidance is overly conservative and fails to take into account potential contributions from new products and the launch of Iceberg Tables. However, Cikos also sees ample room for outperformance under the leadership of incoming CEO Sridhar Ramaswamy.

Investors will be closely monitoring Snowflake's performance in the coming quarters as the company navigates its CEO transition and aims to meet or exceed its conservative guidance. Shares of Snowflake traded lower by 20.1% at $184.00 on the last check Thursday, reflecting the market's initial response to the news.

Disclaimer: The information in this article is based on analyst opinions and should not be taken as financial advice.