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2 Analysts On What To Expect From Snap's Q1 Report

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2 Analysts On What To Expect From Snap's Q1 Report
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Snap Inc (NYSE: SNAP) is on deck to report first-quarter results after Tuesday's market close. Two Street analysts shared their expectations ahead of the print. 

The Analysts

  • Bank of America Merill Lynch's Justin Post maintains a Buy on Snap's stock with an unchanged $24 price target.
  • Cowen's John Blackledge maintains an Underperform on Snap's stock with a price target lowered from $14 to $12.

BofA: App Evolution Is 'Net Positive' 

Heading into Tuesday's earnings report, user growth expectations have "waned" as the company emerged from initial app redesign woes, Post said in a note. (See the analyst's track record here.) 

Uncertainty due to the the impact of the app redesign on story viewing and revenue remains in place, Post said. Nevertheless, the company is testing new versions of its app redesign, and the evolution of the app "is net positive," the analyst said. 

The financial results from Snap's rival social media platforms are "encouraging," but they also set a higher bar for Snap, Post said. 

BofA is modeling the following for Snap's Q1: 

  • Revenue of $248 million versus the Street's estimate of $244 million.
  • Daily active users to a total 193 million.
  • Average revenue per user  42 percent higher than one year ago to $1.28.
  • North American average per user growth of 24 percent to $2.24.
  • A GAAP EPS loss of 31 cents per share.

Related Link: Data Backs Up Concerns The Snapchat Update Is Alienating Users, Stifel Says

Cowen Sticks With Bearish Thesis 

Investor sentiment heading into Snap's earnings report is "mixed," Blackledge said in a note. The stock soared nearly 50 percent in reaction to fourth-quarter results, only to give back much of the gain, the analyst said. (See Blackledge's track record here.) Investors should pay attention to three key points, the analyst said:

  • Advertising revenue growth, as the company scales its advertising business worldwide. 
  • User and engagement growth is expected to rise globally.
  • Commentary around the app redesign and improvements to the Android platform.

Cowen is modeling the following for Snap's Q1: 

  • Revenue of $242 million.
  • North America ad revenue of $177 million (up 46 percent year-over-year), Europe ad revenue of $32 million (up 146 percent) and ad revenue of $33 million in the rest of the world (versus $8 million).
  • Global average revenue per user of $1.24.
  • An adjusted EBITDA loss of $193 million.

Price Action

Snap shares were trading flat at the time of publication Monday afternoon at $14.23. 

Related Link: 

Citi Downgrades Snap To Sell Amid Negative Sentiment Of Snapchat's Redesign

Latest Ratings for SNAP

DateFirmActionFromTo
Jul 2018Cowen & Co.MaintainsUnderperformUnderperform
Jul 2018NomuraInitiates Coverage OnNeutral
May 2018Moffett NathansonUpgradesSellNeutral

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