Market Overview

Wedbush Turns Bullish On Snap, Expresses Increased Confidence In Corporate Governance

Share:
Wedbush Turns Bullish On Snap, Expresses Increased Confidence In Corporate Governance
Related SNAP
IMX Dips In October, But Investors Remain Bullish
71 Biggest Movers From Friday
Facebook Will Fall Further (Seeking Alpha)

Shares of Snap Inc (NYSE: SNAP), which have declined steadily since the company went public in March 2017, could find support from recent management changes and improved execution, according to Wedbush. 

The Analyst

Analyst Michael Pachter upgraded Snap from Neutral to Outperform and increased the price target from $11.50 to $12.25.

The Thesis

Snap's decelerating growth trends, fierce competition for user mindshare and ad dollars and history of being hugely unprofitable have kept Wedbush on the sidelines, Pachter said in a Tuesday note. (See his track record here.) 

Stock compensation as a percentage of revenue, at 70 percent, as well as continuing free cash flow burn acted as deterrents, the analyst said. 

With new management in place, the company has the opportunity to significantly improve its execution, Pachter said.

Tim Stone was hired as CFO in May and fully transitioned into the role by mid-August, the analyst said. On Monday, the company announced the departure of Chief Strategy Officer Imran Khan.

"The departure of Mr. Khan makes Mr. Stone both more visible and more vital in our view, and gives us confidence that corporate governance will improve and have a measurable impact on the development of and articulation of the company's strategy," Pachter said. 

Snap's valuation leaves room for upside due to multiple expansion and potentially accelerated progress toward profitability, according to Wedbush. 

The Price Action

Snap shares have shed about 33 percent year-to-date.

The stock was trading up 2.25 percent to $9.96 at the time of publication Tuesday. 

Related Links:

How to Buy Snapchat Stock

BTIG Maintains Neutral Snap Thesis Ahead Of Q2 Report, But 'Patience Is Wearing Thin'

Latest Ratings for SNAP

DateFirmActionFromTo
Oct 2018JefferiesMaintainsHoldHold
Oct 2018Canaccord GenuityMaintainsHoldHold
Oct 2018JP MorganDowngradesNeutralUnderweight

View More Analyst Ratings for SNAP
View the Latest Analyst Ratings

Posted-In: Michael Pachter WedbushAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

 

Related Articles (SNAP)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
AMTDMorgan StanleyUpgrades65.0
APOMorgan StanleyDowngrades34.0
ARMKBairdUpgrades44.0
CGMorgan StanleyDowngrades23.0
EIXEdward JonesDowngrades0.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

How The Path Of Hurricane Florence Could Affect You At The Pump

Nike Has Regained Its Footing, Canaccord Says In Upgrade Ahead Of Q1 Print