🔺 What to do when markets are at an all-time high? Find smart bargains, like these.See Undervalued Stocks

BofA raises Snap stock PT to $14, maintains neutral rating

Published 2024/10/30, 17:20
© Reuters.
SNAP
-

On Wednesday, BofA Securities revised its price target for Snap Inc (NYSE: NYSE:SNAP), increasing it to $14.00 from the previous $13.00, while keeping a Neutral stance on the stock.

The adjustment follows Snap's third-quarter results, which surpassed Wall Street's expectations with revenue and EBITDA coming in at $1,373 million and $132 million, respectively. This performance outdid the Street's projections of $1,358 million in revenue and $92 million in EBITDA.

Snap's advertising revenue saw a year-over-year increase of 9%, with Snapchat+ revenues surging 173%. The company's direct response (DR) revenue grew by 16% year-over-year, attributed to robust demand for its 7-0 Pixel Purchase optimization solutions, which saw an increase of over 160% in the third quarter.

Meanwhile, brand advertising revenue experienced a slight decline of 1% year-over-year. The growth in DR revenue was also supported by a growing contribution from App Purchase optimization.

The social media company successfully added 11 million daily active users (DAUs) quarter-over-quarter, reaching a total of 443 million, which was above the Street's estimate of 441 million. However, Snapchat+ subscriptions were slightly below expectations at 12 million, compared to the anticipated 12.4 million, and exhibited decelerating growth.

Looking ahead, Snap provided a fourth-quarter user guidance of 451 million DAUs, an increase of 8 million quarter-over-quarter, which is above the Street's forecast of 448 million. While Snap's revenue outlook for the fourth quarter has a midpoint below Street estimates, its EBITDA midpoint is projected to be higher, indicating a mixed but cautiously optimistic financial outlook for the end of the year.

In other recent news, Snap Inc. announced a share repurchase program valued at up to $500 million and introduced two new ad formats to attract large advertisers.

Analyst firm Evercore ISI raised Snap's price target to $15 from $12, maintaining an In-Line rating on the stock, while Benchmark reiterated a Hold rating citing concerns about average revenue per user growth. JMP Securities upgraded Snap from Market Perform to Market Outperform, highlighting upcoming product launches and advertising enhancements.

Snap has also been involved in efforts to enhance online safety for children, collaborating with U.S. and British authorities.

InvestingPro Insights

Snap Inc's recent performance and future outlook can be further contextualized with real-time data from InvestingPro. As of the latest quarter, Snap's revenue stood at $4.98 billion, with a notable year-over-year growth of 11.08%. This aligns with the company's reported advertising revenue increase and the surge in Snapchat+ revenues mentioned in the article.

InvestingPro Tips highlight that Snap operates with a moderate level of debt and has liquid assets exceeding short-term obligations, which could provide financial flexibility as the company navigates its growth strategy. However, it's important to note that Snap is not currently profitable over the last twelve months, with an adjusted operating income of -$1.15 billion.

Despite the lack of profitability, analysts predict that Snap will become profitable this year, which could be a positive sign for investors considering the company's recent performance and user growth. The company's Price to Book ratio of 8.74 indicates that investors are willing to pay a premium for Snap's assets, possibly due to its growth potential in the social media and advertising space.

For readers interested in a deeper analysis, InvestingPro offers 5 additional tips that could provide further insights into Snap's financial health and market position.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.