Barclays Downgrades Snowflake and ZoomInfo to Neutral
Barclays analysts have recently downgraded shares of Snowflake and ZoomInfo Technologies Inc. to Neutral from Overweight, according to a note released on Friday. While the analysts maintained the price targets for both companies, they expressed concerns about the headwinds facing seat-based models in the industry.
Seat-Based Models Pose Headwinds for Snowflake and ZoomInfo
Barclays noted that the seat-based models in the market are currently facing challenges. This poses a potential obstacle for Snowflake and ZoomInfo, as these companies rely on such models for their business operations. The analysts expressed caution and downgraded their outlook on the stocks, citing uncertainties surrounding the profitability and growth prospects of these models.
Snowflake’s High Multiple Raises Concerns for Barclays
In the case of Snowflake, Barclays analysts are wary of pushing the current high multiple further. They believe that the company needs to demonstrate a substantial recovery in consumption or new product contribution to justify an acceleration in its product growth. With this in mind, the analysts downgraded Snowflake to Neutral, indicating a more cautious stance on the stock.
Uncertain Future for ZoomInfo as Tech Industry Faces Headcount Pressure
Barclays expressed skepticism about the potential for a significant turnaround in ZoomInfo’s fortunes by 2024. They highlighted the ongoing headcount pressure in the tech industry, albeit at a lower magnitude. This factor, combined with other uncertainties, led to the downgrade of ZoomInfo to Neutral. The analysts believe that the company may struggle to overcome these challenges and achieve the anticipated growth.
Potential Threat to ZoomInfo from Larger CRM Vendors, warns Barclays
ZoomInfo operates in a market that is adjacent to larger customer relationship management (CRM) vendors. Barclays warns that these vendors could pose a threat to ZoomInfo’s dominance in the go-to-market data intelligence landscape. If these CRM giants decide to target this sector, it could significantly impact ZoomInfo’s market share and growth potential. This concern adds an additional layer of uncertainty and warrants a more cautious outlook on the stock.
In summary, Barclays analysts have downgraded Snowflake and ZoomInfo to Neutral, expressing concerns about the challenges faced by seat-based models and the high multiple of Snowflake. Additionally, the uncertain future for ZoomInfo due to headcount pressures and potential competition from larger CRM vendors weighs on the analysts’ outlook. These downgrades indicate a more cautious stance on the stocks as the companies navigate through a complex and evolving landscape.
Analyst comment
Negative news. As a result of Barclays analysts downgrading Snowflake and ZoomInfo to Neutral, the market is expected to experience a decrease in investor confidence and potential selling pressure on the stocks. This downgrade indicates concerns about the challenges faced by seat-based models, Snowflake’s high multiple, headcount pressures on ZoomInfo, and potential competition from larger CRM vendors.
