Snap gets new buy rating at Benchmark, firm sees 20% upside

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Snap (NYSE:SNAP) received some positive commentary from Wall Street, as Benchmark initiated coverage with a buy rating, as the firm believes the stock is not accurately showing future advertising gains.

Analyst Mark Zgutowicz, who has a $50 price target on Snap, implying roughly 20% upside, noted that Snap has improved its return on ad spend relatively to peers and aside from Tik Tok, which is owned by China's ByteDance (BDNCE), Snap is "best positioned to capture incremental digital advertising market share in coming years."

"Additionally, we expect a compounding effect from Snap’s differentiated and expanding utility as both an entertainment and communication-based platform in [rest of world], driving DAU’s to ~500M+ by 2025, or 14% above consensus," Zgutowicz wrote in a note to clients.

Snap shares ticked lower in premarket trading to $39.70, down slightly more than 0.5%.

In addition, Zgutowicz added Snap's 91 million daily active users in the U.S. are "unjustifiably

discounted relative to social media comps, especially when considering future US digital advertising budget share gain." The analyst expects that to change in the coming years as Snap's "use case for utility becomes more universally adopted."

The company also has additional levers to pull, including strengthening its targets solutions, as well as roughly 107 million daily active users for its Spotlight product, compared to 650 million for Tik Tok, and the upcoming augmented reality push.

Last month, Goldman Sachs ranked Snap as one of the stocks retail investors sold at high levels, coming in 9th out of 10 names.

Comments

[John_Baja]

see market response

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Snap Inc
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Mar 2, 12:55 PM EST • Disclaimer

[daily123]

Same analyst is downgrading $FB to pump $SNAP, I dont see how issues mentioned in $FB downgrade does not apply to $SNAP

[BigEarn]

The pumping never stops with SNAP. SNAP is already priced way more than its peers when using p/s and none of its peers receive as many randomly published upgrades as they do on SA. In fact, FB is dirt cheap compared to SNAP and SA just published a “HOLD” rating for Facebook. There’s way more value in buying FB over SNAP. IMO the whole market is trash if analysts are simply going to recommend what’s being pumped vs best bang for your buck.