Has the stock hit bottom?

While the rest of the stock market has cruised to highs in recent weeks, a handful of stocks have seen their fortunes diverge violently. This includes technology stocks, which, overall, have outperformed all others as expectations for an interest rate cut rise.

Take Snowflake Inc NYSE: SNOW For example. The data storage giant managed to recover much of the run that began in November and had gained more than 70% by the end of February. But then a mixed earnings report, with signs of slowing growth, caught investors by complete surprise and sent them running.

With almost all of that 70% rally now abandoned, how justified was this sell-off? Snowflake stock has barely had a green day in the last three weeks, and even hit a new low in Tuesday’s session. Well, according to a number of analysts, we are starting to get to the extreme end of the sell-off, where the risk/reward profile suddenly looks attractive.

Several bullish comments on Snowflake

This week alone, the likes of Monness Crespi & Hardt upgraded their rating on Snowflake stock, which the Guggenheim team also did last week. On Friday, the investment firm shared bullish comments in a note with clients, saying the company is still a “valuable asset” that has only become more attractive as a long-term investment after the recent decline. While acknowledging the headwinds that exist right now, Guggenheim is still optimistic about the industry as a whole, as well as Snowflake’s ability to continue gaining market share in the years ahead.

It was a view that was echoed by the Citi team, which earlier this month reiterated a buy rating on Snowflake shares, giving them an updated price target of $240. Considering that Snowflake shares were trading around the $155 mark during the first half of Tuesday’s session, investors are anticipating a targeted upside of more than 50%. That’s not bad for a tech company reporting record revenues.

However, Snowflake has some work to do to regain market trust. Sharing softer-than-expected guidance last month, along with the announcement of changes in the executive team, have given investors pause for thought and will want to see a marked improvement in the next earnings report.

Considering the technical case for Snowflake Stock

But in the meantime, there’s an opportunity here. In addition to the bullish outlook and 50% upside target, investors are looking at a stock that, straying from the technical definition, is extremely oversold right now. This is based on Snowflake’s Relative Strength Index (RSI), which looks at a stock’s recent trading performance and provides a reading between 0 and 100, where anything above 70 is overbought and anything below 30 is oversold.

It goes without saying that, at 27 years old, Snowflake stock falls firmly into the latter category. You never want to make a decision solely on this type of indicator, but right now it gives considerable weight to the bullish thesis.

Participating in Snowflake Stock

It’s also worth noting that even though Snowflake shares hit a new low yesterday, they rallied into the close and closed higher than the previous day. Technically, this is also bullish, as it suggests the bears have run out of steam and Wall Street is starting to snap up stocks at rock-bottom prices. With the benchmark S&P 500 index on the verge of setting another record, there is simply too much bullish sentiment and risk-on appetite in the market right now for a stock like Snowflake to remain so beaten down.

Investors should expect Snowflake to consolidate at least around the $160 mark by the end of the week, with a strong likelihood that yesterday’s rally will turn into something bigger in the near future.

Before you consider Snowflake, you’ll want to hear it.

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