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On Thursday, TD Cowen revised its outlook on Snap Inc (NYSE:SNAP), reducing the company's price target from $12.00 to $10.00, but kept a Hold rating on the shares. The adjustment is primarily attributed to heightened macroeconomic concerns, as indicated by a decline in consumer sentiment reported in TD Cowen's proprietary U.S. consumer survey for March. According to InvestingPro data, SNAP's stock is currently trading near $8, showing a significant 54% decline from its 52-week high of $17.33.
The firm's analysts, led by John Blackledge, have expressed caution due to a "challenged macro environment." Despite observing a robust growth in digital advertising and a positive trend in advertiser count during the first quarter, which they expect to yield a year-over-year increase of 12%, the firm has made downward revisions to their financial forecasts for Snap. The analysts anticipate that Snap's subscription service, Snap+, will account for 45% of the incremental revenue growth in 2025. InvestingPro analysis shows the company maintains strong liquidity with a current ratio of 3.95, though it operates with a moderate debt level and posted revenue growth of 16.4% in the last twelve months.
TD Cowen has adjusted its 2025 revenue and EBITDA estimates for Snap downward by 3.5% and 11%, respectively. This reassessment is a direct consequence of the macroeconomic factors mentioned earlier. Furthermore, revenue and EBITDA projections for the years 2026 through 2030 have been decreased by an average of 11% and 20% annually. For deeper insights into SNAP's financial health and growth potential, including 8 additional ProTips and comprehensive valuation metrics, visit InvestingPro.
The new price target of $10.00 is derived from a discounted cash flow (DCF) analysis, which reflects the lowered expectations compared to the previous target of $12.00. The firm's analysts have not altered their neutral stance on the stock but are clearly taking a more conservative approach in light of the current economic headwinds and their potential impact on the company's financial performance. According to InvestingPro Fair Value analysis, SNAP currently appears to be trading below its intrinsic value, with analysts projecting profitability for the company this year.
In other recent news, Snap Inc. has made several notable announcements impacting its financial and operational landscape. The company entered into a purchase agreement to sell $1.5 billion in senior notes, with proceeds primarily used to repurchase outstanding convertible notes and support general corporate purposes. Additionally, Snap amended its Revolving Credit Facility, extending the term for $800 million to 2030, reflecting its strategic financial planning. Meanwhile, JMP analysts adjusted their price target for Snap from $16.00 to $14.00, maintaining a Market Outperform rating based on revised revenue and EBITDA projections for 2026.
In another development, Snap Inc. has partnered with Later to enhance influencer marketing tools on Snapchat, aiming to streamline content creation and management for marketers and creators. Guggenheim provided an analysis indicating a modest deceleration in Snap's global audience reach growth and app downloads in the first quarter, aligning with Snap's guidance for Daily Active Users. Despite these insights, Snap's management does not anticipate significant disruption from the rollout of its new Simple Snapchat feature. These recent developments highlight Snap Inc.'s ongoing efforts in financial management and strategic partnerships, offering investors a clearer view of the company's direction.
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