Wells Fargo 'cautiously optimistic' on Snowflake heading into Q2 amid recent decline
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Investment firm Wells Fargo said on Thursday that it is "cautiously optimistic" on Snowflake (NYSE:SNOW) heading into next week's second-quarter results, despite the 15% decline since the company's analyst day in June.
"While still tough to call any real turn, we're cautiously optimistic into the print & incrementally more confident in a strong '24 rebound," analyst Michael Turrin wrote in an investor note, adding that the decline now presents a more "balanced setup" going into the release.
Turrin has an overweight rating and $195 price target on Snowflake (SNOW) shares.
Turrin also noted that the underperformance is likely due to the company's second "significant" cut to revenue guidance for fiscal 2024 and "lingering fears" of further impacts. There was zero week-over-week growth in April and "persistent" optimization headwinds, including in storage and retention and among older customers, Turrin pointed out. 
Despite that, some recent read-throughs suggest there is stabilization in consumption-based activity, including Amazon's (AMZN) stabilization in AWS in July. Separately, at the investor day, Snowflake (SNOW) management, led by CEO Frank Slootman, said that consumption was "back where we'd expect it to be" for May and June, which suggests that consumption trends have leveled off and are not getting worse.
A consensus of analysts estimate that Snowflake (SNOW) will earn 10 cents per share on $661.96M in revenue during its fiscal second-quarter.