Snap Inc. (NYSE: SNAP) is scheduled to release its second-quarter financial results after the markets close on Tuesday. The consensus estimates call for a net loss of $0.10 per share and $359.56 million in revenue. The same period of last year had a net loss of $0.14 per share and $262.26 million in revenue.
Earlier this month, Merrill Lynch’s Justin Post called for more upside at Snap. The firm maintained a Neutral rating on Snap, but raised its price objective to $17 from $15, implying an upside of 11.4% from the most recent closing price of $15.26.
In May, Snap’s “gender-face-swap” filter went viral and SnapKit app Yolo reached number one on the iOS download charts. Third-party Snap app data in the second quarter suggests downloads were near record levels.
For advertisers, checks remain mixed, though self-service spend is likely up materially, and Merrill senses more optimism on Snap’s innovation and less concern on user trends. Overall, the brokerage firm anticipates improving user trends and revenue upside in the second quarter, though it expects Snap to remain conservative in its outlook.
Merrill Lynch further detailed in its report:
Snap is a top mobile communication tool, and is early in its opportunity to benefit from smartphone proliferation & growing usage of mobile video. We are constructive on Snap’s demographics and high engagement, and believe ongoing transition to programmatic will enable user monetization to scale. However, competitive pressures are rising as Instagram & WhatsApp are growing their user bases faster than Snap, and there is risk that Snap’s feature set is not building a sustainable competitive moat.
Excluding Tuesday’s move, Snap had outperformed the broad markets, with its stock up about 157% year to date. However, in the past 52 weeks, the stock was only up about 5%.
A few other analysts weighed in on Snap ahead of the report:
- Stifel has a Buy rating.
- Morgan Stanley’s Underweight rating comes with a $13 target.
- Goldman Sachs has a Buy rating with an $18 price target.
- Credit Suisse has an Outperform rating and an $18 price target.
- Moffett Nathanson has a Neutral rating with a $10 price target.
Shares of Snap traded up about 2% on Tuesday to $14.41, in a 52-week range of $4.82 to $16.24. The consensus price target is $13.20.