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Snap Gets Analysts' Support After First-Quarter-Loss Forecast

Snap's estimate of a first-quarter loss doesn't daunt Wall Street analysts and investors. Price targets and the stock price are higher.
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Analysts voiced support for Snap  (SNAP) - Get Snap Inc. Class A Report on Friday after the Snapchat parent beat Wall Street's fourth-quarter expectations but offered disappointing guidance. 

Shares of the Santa Monica, Calif., photography-focused social-media company were nearly 4.8% higher at $61.12 at last check.

After the bell on Thursday Snap forecast a first-quarter EBITDA loss, undermining a better-than-expected financial report for the fourth quarter.

Stifel analyst John Egbert, who has a buy rating on the stock, raised his share-price target on the company to $70 from $60.

"Snap reported impressive fourth-quarter results as it comfortably topped expectations across most metrics, including doubling the consensus [daily active users] addition forecast, and beating 4Q revenue by about 7%," Egbert said. 

The analyst noted "that Snap has emerged as a compelling choice for advertisers with its innovative ad platform, robust ad products catering to both direct response and brand advertisers, and its vast unduplicated reach consumers aged 13-34."

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Jefferies analysts have a buy rating on the company with a $65 share price target.

The results show “clear catalysts in place” for 2021, given growth in daily active users, revenue growth, and a strong first-quarter guidance," Jefferies said. 

The lower-than-expected Ebitda guidance was “the only negative,” but incremental investments can drive revenue growth of 50% in 2021, Jefferies said.

Piper Sandler, which has an overweight rating on the company with a $66 price target, said the stock’s negative reaction before the bell reflects high expectations and a rally going into the report. This is “a healthy pullback and reset of expectations,” Piper Sandler said.

Analysts at Loop Capital Markets, who have a buy rating and $49 share-price target, said the decline is a “a ‘sell-the-news’ reaction as fundamentals appear robust across the board.”

The Ebitda guidance reflects content costs related to “a new and unmonetized platform with a strong start and large opportunity,” the analysts said.