Snowflake ‘s growth could be losing steam, according to BTIG. Analyst Gray Powell downgraded Snowflake to neutral from buy and lowered estimates, citing softening sentiment around the cloud computing company after speaking with its clients. “”In our recent fieldwork, we heard concerns on the potential for growth to slow in a weakening environment, and we are seeing a deceleration in growth at the large hyperscale cloud IaaS providers,” Powell wrote in a Tuesday note. Powell referred to conversations with Snowflake’s clients, including two large customers that are considering shifting some spending to software company Databricks to deal with rising costs at Snowflake, that make BTIG “more cautious” on the company. Powell also pointed to recent quarterly reports from Amazon, Microsoft and Alphabet that showed slowing revenue growth in cloud infrastructure as a service, which the analyst says has negative implications for Snowflake. “To be blunt, this is a tough call, because the long-term growth opportunity ahead of SNOW remains very compelling and management is considered among the best in software. That said, based on our recent fieldwork, we are slightly reducing estimates on SNOW for FY23 and FY24. At over 16.5x 2023E EV/sales, we see a balanced risk reward on the stock,” Powell wrote. Shares dropped more than 5% in Tuesday premarket trading. —CNBC’s Michael Bloom contributed to this report.
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