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Snapchat mobile app logo.
Lionel Bonaventure / AFP through Getty Images
Snap
shares jumped more than 5% on Tuesday after Goldman Sachs raised its target price and said Snapchat will beat its own guidelines in the fourth quarter.
Snap shares (ticker: SNAP) advanced 5.8% to $ 51.05 in the afternoon trading.
On a positive note, Goldman Sachs analyst Heath Terry set a target price of $ 70 per share, up from $ 47, implicitly justifying 45% of the growth in technology improvements and business partnerships the company has announced from its third quarter results.
Based on research from third-party application data, Terry’s team concluded that Snap’s direct-response announcements remained strong through the latest Covid-19 blockchains and will contribute 8 percentage points above consensus estimates for fourth-quarter growth. .
For the fourth quarter, analysts surveyed by FactSet expect sales of $ 844 million, an increase of 51%.
The rest of Wall Street isn’t as excited about the Snap stock as Terry. Analysts have an average target price of $ 42.12, which implies a disadvantage of about 17% for shares. Of the analysts who follow the company, 67% consider it Buy and 26% call it Hold. Only three analysts, or 8% of the 39 who cover it, have a sales rating.
Looking ahead to the fourth quarter, Terry predicted that demand for advertisers for online inventory will continue to rise – benefiting from other stocks on social media – as TV viewers decline and the economy recovers from the damage caused by blockages related to coronavirus.
And as the demand for ads grows, Snap advertising tools continue to improve. Terry wrote that Snap’s efforts to give advertisers more information about the performance of their ads, including making an adjustment to a tool that helps customers optimize their advertising spending, will help customers get the most out of each one. dollar spent on the platform. Snap should collect more advertising customers or a larger share of spending from existing ad buyers if it can continue to demonstrate the benefit of using its tools.
Terry also highlighted Snap’s partnership with
Unity Software
(U), the video game developer toolkit that will allow advertisers to place in-game ads.
Unity has a large inventory and boasts more than two billion active end-users per month, Terry noted. Thanks to the partnership, advertisers using Snap tools can now target this vast user base, significantly increasing the size and availability of the advertising inventory that Snap can sell. The agreement also includes giving developers using the Unity platform access to a piece of Snap technology that makes it easy to connect to games and applications.
Snap shares had a strong year, up about 200%, as a benchmark
S&P 500
the index increased by 16%.
Nasdaq Composite
the index increased by 45% in 2020.
Write to Max A. Cherney at [email protected]