Despite Huge Run Already In 2019, RBC Sees Further Upside For Snapchat's Stock

Shares of Snap Inc SNAP are up more than 100 percent since the start of 2019 and multiple catalysts ahead could help the momentum continue, according to RBC Capital Markets.

The Analyst

RBC's Mark Mahaney upgraded Snap from Sector Perform to Outperform with a price target lifted from $10 to $17.

The Thesis

The company behind Snapchat suffered multiple execution issues throughout 2017 and 2018, but key catalysts coupled with a "much-less demanding" valuation warrants a bullish stance on the stock, Mahaney said in a note. For example, Snapchat remains a top-10 ranked app in the U.S. and top-four within the Photo & Video Category. This suggests evidence of stabilization among iOS users while third-party data in key markets found a "uniform sequential ramping" in Google Play downloads among Android users.

Snap has a few initiatives to help boost monetization, including early signs of the Selfe-Serve Platform being popular with advertisers, improving ROI communication with performance advertisers and the six-second commercials have resulted in strong engagement from users.

Mahaney says Snapchat continues to offer a differentiated value proposition that "may now become appreciated." In fact, Mark Zuckerberg's new vision for Facebook, Inc. FB to transform towards a privacy-focused and messaging platform favors Snapchat's camera-first approach to social media.

Price Action

Snap's stock was trading higher by more than 4.7 percent at $12.40 per share Monday morning.

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