Trio of Bullish Ratings Has Snap Inc Stock Flying High

Wall Street’s newest tech IPO, Snap Inc (ticker: SNAP), appears to be turning things around.

After Snap, the parent company of the popular Snapchat social media app, received mostly negative reviews from Wall Street in the days following its initial public offering, analyst sentiment has now shifted in a more bullish direction. On Monday morning, JMP Securities, Citi and RBC Capital Markets all initiated coverage of SNAP stock at either “outperform” or “buy.”

According to RBC Capital analyst Ronald Josey, the Snapchat story is still in its early stages.

“With an at-scale, highly engaged and growing audience, we believe Snap’s product is differentiated and its delete-by-default approach is increasingly attracting a wider audience,” Josey says. “This as monetization ramps and despite being just six quarters in from beginning to sell ads, 60 percent of the Kantar top 200 brands are advertising on its platform.”

JMP says features such as Lenses, Geofilters and Spectacles differentiate Snap from other social media platforms. In addition, Josey sees a major opportunity for margin expansion as Snap’s advertising business matures.

One of the primary concerns bearish analysts have about Snap is the company’s declining user growth numbers in recent quarters, but Josey believes user growth will recover in time.

Citi analyst Mark May isn’t concerned about user growth and says Snap should make for an incredible growth story over the next seven years.

“While user growth and audience scale may remain modest compared with Facebook (FB), the low rate of monetization currently and the high rate of engagement and penetration of Snapchat’s product within its core 13-24 age demo should enable significant revenue growth and margin leverage,” May writes.

Citi is projecting an impressive compound annual revenue growth of 44 percent through 2024.

From March 2 to March 20, Nomura, Pivotal Research Group and Needham all initiated coverage on Snap stock with bearish outlooks. During that time, no major research firm took a positive stance on Snap.

However, the trio of bullish notes out on Monday seems to have reassured the market. Citi, JPM Securities and RBC Capital set…

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