Shares of Snap (NYSE:SNAP), parent company of Snapchat, rose on Tuesday following an upgrade from Stifel ahead of the company’s earnings release after the bell.
Stifel upgraded Snap to buy from hold and hiked its price target to $17 from $13. The company is trading around $14 per share.
After a rough two years since its initial public offering in 2017, Snap’s stock is up nearly 160% this year, trading close to its $17 debut price from March 2017. After spending most of last year under pressure as users and advertisers left Snapchat’s platform, the company is restructuring as it focuses on younger users, stepping up its efforts in augmented reality and improving its advertising business.
Headed into second-quarter earnings, company officials estimate revenue will grow 37% year-over-year to $359 million, which is roughly in line with Wall Street’s consensus estimate of $360 million and on the high-end of Snap’s guidance range. Analysts say they believe Snap gave cautious guidance due to the company’s reorganization.
Stifel analyst John Egbert said Snap, which has a market value of about $19 billion, has had "overlooked" success in its advertising business. The technology company has been transitioning toward self-service advertising which cuts costs for advertisers; however Egbert said bid rates for Snap have shown signs of stabilization.
Stifel also said it will be listening on the earnings call about Snap’s newly launched Android redesign which has appeared to have a positive impact on user growth.
Shares advanced 26 cents, or 1.8%, to $14.41
