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Snap Shares Rise; JMP Lifts to Outperform on Photo Site Potential to Monetize Offerings

Analyst Ronald Josey pegs price target at $20, nearly 40% above Thursday close. More users and better execution should equal more revenue and profit, he says.

Snap  (SNAP) - Get Snap Inc. Class A Report shares gained on Friday after JMP Securities upgraded the social-media photo site to market outperform from market perform, saying it was more confident that the Snapchat parent will be able to grow its user base and monetize its offerings.

Snap stock at last check was 1.9% higher at $14.72 on the Nasdaq after analyst Ronald Josey set a one-year price target of $20, nearly 40% above the Thursday closing price.

Snap “is well positioned to continue to add [daily active users] and close the monetization gap with other major social networks,” Josey said in a note to clients 

While the $20 target is “among the most expensive in our coverage universe,” Josey said, the Santa Monica, Calif., company's launch of new ad offerings should help improve reach and user engagement. And better execution “should lead to continued revenue growth and improving overall profitability.”

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While Snap has lost momentum to the likes of Facebook's  (FB) - Get Meta Platforms Inc. Report Instagram and Tik Tok, Josey and other analysts still see the visual-oriented instant-messaging service holding its own in the competitive social media platform world.

"Over the past 12 months, Snap has been executing well, and we see several near-term incremental catalysts including benefits from the Android  (GOOGL) - Get Alphabet Inc. Report app, premium content partnerships, a gaming platform launch, and sales reorganization," MKM Partners analyst Rohit Kulkarni said in an October research note initiating coverage on the company.

"However, we do not believe that SNAP has a long-term sustainable competitive moat, given the history of user growth and engagement lumpiness."

Snap went public in March 2017 at $17 a share. This year the stock almost tripled through Thursday's close. It traded near $18 in late July.