Snap (SNAP) Investor Day: Ambitious Growth Plans Could Send Stock Over $100, Analyst Says

February 24, 2021 8:11 AM EST
Get Alerts SNAP Hot Sheet
Price: $58.55 +0.43%

Rating Summary:
    39 Buy, 14 Hold, 3 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 17 | Down: 10 | New: 10
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Snap (NYSE: SNAP) held an Investor Day yesterday to outline plans and projections for 2021 and beyond.

Analysts at multiple firms raised the price target on SNAP after the company presented ambitious plans to grow revenue at ~50% year over year (YoY) or better for the next several years.

Credit Suisse analyst Stephen Ju raised the price objective on SNAP to $80.00 per share from the old $65.00. This is a result of a hike in the medium-term revenue growth estimates.

“While there are multiple factors that can help the company attain that growth rate over the near to medium term, the key takeaway is that it is still only monetizing one part of the total engagement in the Action Bar - Stories/Discover. The other parts which make up the balance of the ~30 minutes per day engagement – Maps, Communications, Camera, and Spotlight – are essentially untouched. With the exception of Games and Minis (within Communications) Camera, Maps and Spotlight seem on their way to reaching universal user adoption,” Ju wrote in a note sent to clients today.

The analyst notes that this ambitious growth scenario is dependent on a positive operating environment as well as execution. This level of growth over the next three years (2022-2024) could see the price action hit $110 per share.

“We maintain our Outperform rating on the following: 1) potential for better-than-expected DAU growth with a revamped Android app released in more geographies, 2) potential for better-than- expected ad revenue on ramping product rollouts and marketer adoption, 3) monetization optionality from increased engagement from Games, Maps, and longer term Spotlight,” Ju adds.

Rosenblatt analyst Mark Zgutowicz is even more bullish than his Credit Suisse colleague. He says that the social media company “didn't hold anything back in its revenue and expense outlook” yesterday.

“Perhaps more impressive than the outlook for 50%+ revenue growth over the “next several years” is parallel healthy adjusted EBITDA expansion. Near-term Spotlight content investment and other platform development (e.g. Map and AR/Camera) appear well-supported by revenue momentum and a suggested 600+ bps of gross margin leverage this year.

“While not as clearly articulated on the earnings call just a few weeks ago, we believe the 4Q spike in average impression pricing, coupled with a third straight quarter of ARPU acceleration, confirmed brands are back strong on both Discover and Stories. It appears these two core platforms will direct the ship near-term, while ongoing AR/Camera, Map, Spotlight and International investments will fill the intermediate to long-term outlook,” the analyst said in today’s memo.

Zgutowicz raised the PT on a Buy-rated SNAP to a "Street High" $100.00 per share, up from $70.00.



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