Investing

Why Analysts Are Getting Even More Bullish on Snap

Snap Inc. (NYSE: SNAP) was having a record day in terms of gains, with its stock up over 50%. While it is still a ways off its all-time highs set last year, Snap is making a strong case to buy and analysts across the board seem to agree.

24/7 Wall St. has collected and reviewed a few of the analyst reports on Snap that have come out after earnings. Overall, analysts are very bullish on the stock, and after earnings like this, it’s hard not to be.

As for the results, Snap reported that it had adjusted per-share earnings of $0.22, compared with the $0.10 consensus estimate. For the topline, analysts were calling for revenues of $1.2 billion, but Snap delivered $1.3 billion.

Perhaps one of the main highlights from the report was user growth, which increased by 20% year over year to 319 million.

BofA Securities upgraded the stock to a Buy rating with a $55 price target. The had a few bullet points for the upgrade:

  • An unexpected fourth quarter revenue beat and health first quarter guidance, which give BofA confidernce that iOS 14.5 IDFA workaround solutions are gaining traction and the platform is not permanently impaired.
  • Strongest uder growth in the sector and stabilizing time spent data suggests manageable impact from TikTok.
  • Multiple product catalysts that could drive average revenue per user expansion  and accelerate growth to 50%+ exiting 2022
  • Attractive valuation versus history

Jefferies reiterated a Buy rating and raised the price target to $60 from $55. The firm noted that, against the worst investor sentiment since 2018, Snap delivered an 8% revenue beat and first-quarter revenue guidance 4% above the consensus. Most importantly, Jefferies said, users beat by 2 million and have now grown over 20% year over year for five straight quarters, which the company has not done since 2017. Overall, Jefferies believes the privacy headwinds and competitive fears were overblown.

JMP Securities commented on concerns related to Snap going into this report. The firm believes that the worry coming into the quarter was that privacy headwinds would continue, but Snap’s Advanced Conversions measurement tools were restoring some direct response budgets quicker than expected. While JMP Securities does not yet project Snap to return to its previously set goal of 50% revenue growth, the firm has significantly greater confidence in revenue visibility going forward.

Snap stock was last seen up about 52% at around $37, in a 52-week range of $24.32 to $83.34. The stock has a consensus price target of $61.94 and a market cap of $78.8 billion.

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