Key takeaways
- Rothschild & Co Redburn Upgrades Snap to Buy Neutral, Sets $10 Price Target
- SNAP shares rose as much as 8.14%, reaching an intraday peak of $6.00 versus a previous closing price of $5.65.
- The bullish call highlighted expected GAAP profitability in 2025, improving advertising trends and expanding subscription revenues.
- The Wall Street consensus stands at Hold with an average price target of $8.08 among 30 professional analysts
- Company insiders have divested more than 2.5 million shares worth approximately $13.3 million over the past three months.
Snap shares received an upward boost on Monday after an upgrade from Rothschild & Co Redburn, which shifted its stance from neutral to buy and pushed the stock up as much as 8.14% during trading hours.
Shares of the social media company touched an intraday high of $6.00, up from Friday’s settlement of $5.65. Trading volume at mid-session reached about 6.8 million shares.
Rothschild set a $10.00 price target for SNAP, a threshold the stock hasn’t approached recently given its year-to-date decline of roughly 30%.
The investment firm cited strengthening business fundamentals as a catalyst for its improved outlook. Key factors include the expected move to GAAP profitability during the current year, improved performance in core advertising operations, and acceleration of subscription-based revenue.
The enhanced advertising tools and platform capabilities are described as providing a “specification-driven improvement” to business performance. The momentum in subscriptions was highlighted as evidence of stable and increasingly predictable revenue streams.
pop It had fourth-quarter revenue of $1.72 billion, reflecting 10.2% year-over-year growth and slightly exceeding Wall Street expectations of $1.70 billion.
The lack of profits raises questions
With regard to profitability, pop Quarterly EPS of $0.03 was reported – $0.12 below the analyst consensus of $0.15.
The platform operator shows a negative return on equity of 20.72% along with a negative net margin of 7.76%. Street forecasts expect full-year EPS of -$0.12 for fiscal 2025.
Technically, the stock’s 50-day moving average is at $4.98, while its 200-day moving average is at $6.67.
Despite Monday’s progress, overall sentiment on Wall Street remains measured. Of the 30 analysts tracking the company, one has assigned a strong buy rating, six recommend a buy, 20 hold the position, and three advise a sell. The average consensus price target is $8.08.
Guggenheim and Rosenblatt both reaffirmed Neutral ratings in mid-April with price targets of $6.50 and $6.40, respectively.
Executive stock sales continue
Corporate insiders continued to reduce their holdings. Rebecca Morrow, chief accounting officer, disposed of 16,499 shares at $4.70 during February, representing a 3.41% decrease in her ownership position.
Insider Ajit Mohan liquidated 119,339 shares at the same price, reducing his stake by 2.26%.
Collectively, company insiders sold 2,565,573 shares worth approximately $13.33 million during the last quarter.
Institutional ownership represents 47.52% of outstanding shares. Several small-cap funds increased their positions during the third and fourth quarters of the previous year, albeit in relatively limited amounts.
Snap’s market cap currently stands at around $9.54 billion, accompanied by a debt-to-equity ratio of 1.53 and a current ratio of 3.56.
Prior to Monday’s upgrade, Mizuho’s most recent analyst comment came in February, which lowered its price target from $9.00 to $7.00 while maintaining a Neutral rating.
