Snap Inc (SNAP) PT Raised to $13 at Deutsche Bank; More Positive on Monetization Side
Deutsche Bank raised its price target on Snap Inc (NYSE: SNAP) to $13.00 (from $12.00) while maintaining a Hold rating.
Analyst Lloyd Walmsley commented, "Snap reported mixed 2Q results directionally in line with our preview (soft on DAUs but with an improving monetization outlook). While we expected DAUs to go negative Q/Q in the quarter, we were slightly disappointed that guidance implies further risk to DAUs in 3Q and we got no specific color around the Android re-build in terms of timing or an early look on the impact in test markets. We came away more positive, however, on the monetization side. The strength in revenue and positive color around the Snap Pixel (>100M purchase events, 70M in 2Q alone) and Ads Manager confirm our recent conversations in the ad industry highlighting improving performance from direct response advertisers. Furthermore, Facebook's push of the Stories format - while competitive on an end user level - likely helps Snapchat on monetization, as it creates larger pools of ad buyers supporting the vertical video format and will highlight the relative value of Snap eCPMs (running at a ~40% plus eCPM discount). We maintain our Hold rating and $13 PT (unchanged) on Snap shares. Despite disappointing results, Street estimate look set to rebase lower and the next catalyst may well be positive press as the new Android app rolls out in new markets, which could drive some optimism around the shares, particularly with high short interest."