It boosted its price target to $75 from $52.
"We see Snap uniquely positioned as a videocentric platform, with an augmented reality and social commerce opportunity, also centered around a younger, digitally native audience," wrote Wedbush analyst Ygal Arounian.
"Snap is seeing improving momentum coming out of the pandemic, as its platform has gained traction with advertisers. Snap more than doubled its advertiser count year-over-year in fourth-quarter 2020, reaching its highest number of advertisers to date," Arounian said.
Snap recently traded at $63.99, up 2.5%. The $75 target indicates 20% potential upside from Tuesday's close at $62.44.
The Santa Monica, Calif., company has more than doubled over the past six months amid strong demand for social-media stocks.
Last month, Bank of America analyst Justin Post downgraded the stock to neutral from buy, cutting his price target to $67 from $78.
He cited valuation concerns for the social media company. It was then trading at $55.50, some 15% below current levels.
Post said that additional multiple expansion is "unlikely" in coming quarters. “We think investors may become increasingly concerned on tougher [second half] comps, especially in context of a broader economy that should be accelerating.”
In February, Morgan Stanley had upgraded Snap to overweight from equal weight. "SNAP’s use cases/engagement continue to expand,” Morgan Stanley analyst Brian Nowak said.
Also in February, Snap forecast a first-quarter loss before interest, taxes, depreciation and amortization, undermining a better-than-expected financial report for the fourth quarter.
Snap said its adjusted first-quarter loss on that basis would range from $50 million to $70 million.