Tuesday March 19, 2024 by MarketNewsData

Financial firm Redburn-Atlantic downgraded its rating for Snowflake Inc. (SNOW) from Neutral to Sell. It also reduced its price target for the cloud data company’s shares from $180 to $125. Snow new CEO is expected to appear with Carmer tonight. Snow closed up +0.89% at $157.55

This decision stems from concerns about Snowflake’s technological infrastructure. According to Redburn-Atlantic, the company’s platform might struggle to adapt to future industry trends, potentially hurting its competitive edge. The company recently issued a profit warning, which the analyst sees as a sign of ongoing difficulties, especially as the industry shifts its focus from storage to improving processing at the heart of the platform.

Redburn-Atlantic also argued that the market’s optimism about Snowflake’s future performance is excessively high. According to them, the challenges that Snowflake faces are not transitory market changes, but deeper issues rooted in the company’s structure.

In addition to Snowflake, Redburn-Atlantic also downgraded the stock of MongoDB Inc. (MDB) on Tuesday, shifting it from Neutral to Sell. Along with this, the consulting firm markedly decreased its price target for MongoDB from $410 to $295. MDB closed down -0.72% at $353.80.

Redburn-Atlantic highlighted that MongoDB, despite its promising capabilities to meld with enterprise databases, could face challenges due to its higher pricing in a market increasingly concerned about cost optimization, particularly due to rising storage expenses.

While Redburn-Atlantic acknowledged the merit of MongoDB’s technology, it implied that the market might be overly bullish on the company’s current valuation.

The analysis spotlighted the potential obstacles that MongoDB could encounter as businesses strive to control escalating operational costs. The necessity for cost optimization, given MongoDB’s pricing model, could adversely impact its growth potential.

This downgrade comes as industry pundits scrutinize tech companies’ ability to uphold growth rates in an environment of increasing costs and economic volatility.

Redburn-Atlantic’s reassessment serves as an important insight for investors keeping track of tech stocks, especially those primarily offering database services. The market will be closely watching MongoDB’s financial performance and market standing in response to these new evaluations.