Rosenblatt analyst Mark Zgutowicz initiates coverage on Snap Inc (NYSE: SNAP) with a Buy rating and a price target of $18.00.

The analyst commented, "We initiate SNAP with a Buy rating and $18 DCF-based price target, reflecting ~28% upside from its 7/19 closing price. Present ARPU levels are well below social media peers, providing room to comfortably double by CY23E. Near-term, SNAP shares should ride modest ARPU tailwinds from new ad products and video content, and carry into CY20E with Audience Network, scaling ad spend beyond the company’s tapped out US user demo. Longer-term, SNAP faces platform utility hurdles relative to Instagram (IG) and Messenger, which have commanding leads, in our view. We believe SNAP’s fun and frictionless differentiation is best positioned to move downstream demo vs. upstream to avoid heavyweight competition."

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Shares of Snap Inc closed at $14.02 yesterday.