Stifel maintains Snap stock hold rating with $11 target

On Wednesday, Stifel analysts maintained a Hold rating on Snap Inc (NYSE:SNAP) with a steady price target of $11.00. The decision follows the company’s fourth-quarter earnings, which showed revenues slightly above expectations and a margin beat. The social media company, currently valued at $19.46 billion, has demonstrated solid revenue growth of ~14% over the last twelve months. According to InvestingPro analysis, Snap appears undervalued at its current price of $11.60. The first-quarter revenue guidance presented a mixed picture, with projected revenues surpassing expectations but anticipated EBITDA coming in lower.

Stifel’s commentary highlighted the mixed results of Snap’s recent initiatives. On the positive side, enhancements to advertising tools, especially those aimed at small and medium-sized businesses (SMBs), have shown a favorable impact on revenue, contributing to the company’s healthy gross profit margin of 53%. On the other hand, the early feedback from the Simple Snapchat feature indicates challenges in transferring story ads demand and user engagement from a specific user group. InvestingPro subscribers can access additional insights through comprehensive Pro Research Reports, which provide deep-dive analysis of Snap’s business model and growth strategies.

The analysts noted that improvements to Snap’s business model have positively affected the company’s margin outlook, suggesting that the first-quarter EBITDA guidance might be conservative. They anticipate that future investments in larger models and model refreshes could potentially dampen these margin improvements over the medium term.

Stifel’s stance on Snap remains cautious, with the firm choosing to stay on the sidelines. The analysts are looking for more consistent and predictable revenue growth, as well as clarity regarding the competitive landscape, particularly concerning TikTok, before changing their rating on Snap stock.

In other recent news, Snap Inc has been the focus of several analyst reports. Bernstein analysts, led by Mark Shmulik, maintained a Market Perform rating on Snap, citing the potential benefits that could arise from a TikTok ban in the United States. Meanwhile, BMO Capital Markets reaffirmed an Outperform rating on the company, highlighting Snap’s commitment to content creators and advancements in artificial intelligence as key drivers for potential revenue growth.

On the financial front, Snap’s fourth-quarter 2024 earnings surpassed expectations, with revenues slightly above consensus and EBITDA exceeding the company’s guidance. The positive performance was attributed to ongoing momentum in its direct response advertising, a trend that JMP Securities expects to continue based on Snap’s first-quarter 2025 guidance.

Citi analyst Ronald Josey updated the financial outlook for Snap, increasing the price target to $13.50 while maintaining a Neutral rating. This adjustment follows Snap’s strong fourth-quarter results and a stronger than anticipated revenue forecast for the first quarter. In contrast, JMP Securities reaffirmed a Market Outperform rating and a steady price target of $16.00, citing the company’s recent financial performance and potential for growth in the advertising space.

These developments suggest that Snap is navigating the current market effectively and is well-positioned to capitalize on potential shifts in the social media landscape.

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