Snapchat parent Snap Inc (NYSE:SNAP) headed more than 1% higher on Monday amid a first for the recent initial public offering darling: a buy rating, Specifically, Monness Crespi slapped a “Buy” on SNAP stock along with a $25 price target.
If that were to come to pass, that would be roughly 30% upside from last Friday’s closing price.
Analyst James Cakmak had this to say:
“We recognize we are potentially giving too much credit for unproven skills in building a business, rather than just a product, but we see more to Snap than many suggest. There is substantial execution risk, but we’re prepared to give the benefit of the doubt at this stage knowing what we know about Snap and knowing what we know about the efforts of its competitors.”
While it’s a bullish endorsement of SNAP stock, it’s far from a ringing one. Cakmak nods to headwinds that most of the analyst community has already nodded to. Facebook Inc (NASDAQ:FB) — aptly referred to as part of Snap’s “deep-pocketed competition” — is a constant threat thanks to Instagram Stories and other copycat features, as well as its nonvoting shares.
The shares themselves aren’t the problem, but more what they mean to others — specifically, investors that have complained to index providers such as MSCI Inc (NYSE:MSCI), insisting that Snap not be included given the lack of responsibility to its shareholders.
On the bull side, though, Cakmak says Snapchat may be able to grow revenues at up to 7x its competitors.
SNAP shares have struggled since coming public. While shares remain higher than the IPO price of $17, they’ve receded strongly from their highs around $30, reached within the first couple of days of public life.
And the analyst community was quick to pile on with a pretty bearish set of initial ratings. MoffettNathanson, Nomura and Needham all placed various versions of “sell” on the stock, while Susquehanna and Aegis Capital started SNAP stock off with “hold” ratings.
Monness is on board, though. And InvestorPlace’s Vince Martin says Snap is among 10 battered stocks to buy that should join the rest of the market in rallying soon.
As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.