Bank of America analysts acknowledged potential negative impacts for Snowflake (NYSE:SNOW) following a reported cyber threat impacting customer accounts. While maintaining a Neutral rating and $200 price target on the stock, the firm highlights concerns arising from the incident.
"Snowflake first became aware of unauthorized access to certain customer accounts on May 23, 2024," states the Bank of America note. The company, along with Google Mandiant, is investigating the issue that reportedly exposed data from 165 organizations.
Analysts see potential business implications, including a possible pause in data migrations and new customer acquisition as companies evaluate the severity of the attack.
This could lead to short-term revenue impacts, particularly in Q2 due to Snowflake's pay-as-you-go model. However, the firm downplays the materiality of this impact since the issue doesn't stem from a network breach.
The report also mentions potential customer refunds in Q2 due to unauthorized data access by hackers. However, Bank of America states that Snowflake believes the affected accounts were not using multi-factor authentication (MFA), which allowed the hackers to steal credentials, access account instances and exfiltrate customer data, rather than exploit a vulnerability within Snowflake's platform.
Looking ahead, the firm believes the situation can be addressed by stricter joint controls between Snowflake and its customers. They added that Snowflake has already implemented MFA requirements for at-risk accounts. While acknowledging potential customer satisfaction issues arising from the incident, analysts appear optimistic about Snowflake's ability to address security concerns.