Market Overview

Morgan Stanley Upgrades Snap On Improved Ad Product

Morgan Stanley Upgrades Snap On Improved Ad Product

Snap Inc (NYSE: SNAP) has worked to make its platform more useful to advertisers and done a good job reining in expenses, Morgan Stanley said in upgrading the stock.

The Analyst

Morgan Stanley’s Brian Nowak upgraded Snap from Underweight to Equal-Weight and raised the target price from $14 to $17.

The Thesis

Nowak said Morgan Stanley has underestimated Snap’s stronger top- and bottom-line execution. Snap has sped up its ad revenue growth, and its operating expense discipline is improving, which combined are boosting EBITDA.

Nowak said Snap has worked with advertisers and ad agencies to help them better understand how to use Snapchat for advertising and make it easier, which has led to faster new advertiser growth on the platform and boosted how much each advertiser is spending.

Improved Expense Discipline

“We have growing confidence that SNAP’s management team remains laser-focused on improving efficiency, reducing costs, implementing stronger budgeting processes … and individual manager-level cost accountability,” Nowak wrote in a note.

Snap is expected to see slower daily active user growth in 2020, Nowak said, which keeps Morgan Stanley from being more bullish.

Overall, though, Snap’s young target audience, including teens and those in their 20s, is attractive to advertisers, and that should still drive ad revenue, even if daily user growth is a little lower.

“We don’t see SNAP generating positive adj. EBITDA until '20 but expect healthy operating leverage and high FCF conversion once its ad business scales,” Nowak wrote.

Price Action

Snap's stock traded higher by 5.8% to $15.14 at time of publication.

Related Links:

The Launch Of Instagram's Threads Hits Snapchat's Stock

Stifel Upgrades Snap Ahead Of Earnings

Latest Ratings for SNAP

Oct 2019MaintainsNeutral
Oct 2019MaintainsOutperform
Oct 2019MaintainsNeutral

View More Analyst Ratings for SNAP
View the Latest Analyst Ratings

Posted-In: Brian NowakAnalyst Color News Upgrades Price Target Top Stories Analyst Ratings Tech Best of Benzinga


Related Articles (SNAP)

View Comments and Join the Discussion!

Latest Ratings

DRNAH.C. WainwrightMaintains30.0
CALAH.C. WainwrightInitiates Coverage On7.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
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.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

US Unemployment Rate Hits Lowest Level In 50 Years Amid Mixed September Jobs Report

Webull's CEO Gives Tips To The Newest Members of The Zero Commission Club