Snap Inc (NYSE:SNAP) deserves credit for recent improvements to its platform and the stock now has a path to trade at $80 per share, according to Morgan Stanley.
The Snap Analyst: Brian Nowak upgraded Snap’s stock from Equal-Weight to Overweight with a price target lifted from $50 to $80.
The Snap Thesis: Snap continues to see improving user metrics and management confirmed more than 100 million global Spotlight users after launching just three months ago, Nowak wrote in the note. The company also boasts more than 250 million global Maps users and an estimated 300 million-plus global Discover users.
While encouraging metrics to date, the analyst said the bullish case for Snap’s stock is justified as the adoption of these use cases can help lift U.S. usage growth. Specifically, total U.S. minutes can improve at an 11% compounded annual growth rate (CAGR) to reach around 50 minutes per U.S. user per day.
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Snap is ready to monetize the growing usage through an improved ad business, including agency sales teams. As such, the core U.S. Snap business, Discover, Spotlight and Maps can help drive a 37% CAGR revenue growth through 2024.
Under a bull case scenario, Nowak said Snap’s stock has upside potential to $105 per share. Under this scenario, Snap’s monetization efforts result in a 40% CAGR revenue growth through 2024.
SNAP Price Action: Shares of Snap were trading higher by 2.5% Monday morning at $67.16.