Analyst Views On Snap Continue To Be Mixed Ahead Of Quarterly Report

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Investor sentiment around Snapchat-owner Snap ( SNAP ) remains mixed ahead of the company's third-quarter report coming after the market close Tuesday.

[ibd-display-video id=2523808 width=50 float=left autostart=true]Snap's second-quarter report on Aug. 10 fell short of estimates on just about every metric, damaged by the Instagram platform owned by Facebook ( FB ). Both Snap, with its Snapchat app, and Facebook's Instagram provide a mobile communications platform used for sharing photos and videos, with social networking features.

For Snap's third quarter, the consensus estimate is for revenue of $236 million, up 84% from the year-ago period but the fifth quarter in a row of deceleration. The consensus estimate on adjusted earnings, as polled by Zacks Investment Research, is a loss of 14 cents, compared with an 11-cent loss in the year-ago period.

Drexel Hamilton analyst Brian White remained bullish on Snap. In a note to clients Monday, White reiterated a buy rating on Snap with a price target of 30.

"Snap continues to grow at a rapid pace, introduce new innovations, rollout compelling content and remain true to its core base of millennial followers," White wrote. "We continue to believe Snap has strong upside potential over the next 12 months as reflected in our $30 price target."

In his note, Cowen analyst John Blackledge maintained a market perform rating on Snap with a price target of 14. He said main areas of focus will be advertising revenue growth, user growth and activity.

Snap shares fell 2.9% to close at 14.84 on the stock market today . Snap held its initial public offering in March, with shares priced at 17.

IBD'S TAKE:Snap has a weak IBD Composite Rating of 21 out of a possible 99.There are plenty of places on to research and find top stocks.Check out IBD'sTech Leadersfeature to get a broader idea on top tech stocks.

Blackledge expects Snap to report daily active users of 183 million, up 20% from the year-ago quarter and an addition of 10 million from the second quarter.

"The ad revenue trajectory into 2018 and beyond will remain a key focus for investors as Snap ramps its ad products and services," Blackledge wrote.

Facebook has copied the most popular features of Snapchat and deployed them on Instagram, but it's not Snap's only big problem . Data indicate that high-profile users are leaving Snap and finding their way to Instagram.

Research firm and finance website ValuePenguin in a report on Snap's upcoming results estimates user growth in the third quarter continued to deteriorate, "with Instagram overtaking Snapchat in download rankings in the U.S. and the U.K. for the first time," according to Value Penguin analyst D.J. Kang.

"We believe Snap's stock is still very overvalued," Kang wrote. He said Snap looks almost identical to another social network stock, Twitter ( TWTR ), saying both are 'social platforms' with dismal user growth in face of competition from Facebook."

RBC Capital Markets analyst Mark Mahaney in a research note to clients Friday maintained an outperform rating on Snap and price target of 20.

"We believe that Snap has taken the necessary steps to help ensure robust product innovation going forward," Mahaney wrote.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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