"Over the past 12 months, SNAP has been executing well, and we see several near-term incremental catalysts including benefits from the Android app, premium content partnerships, a gaming platform launch, and sales re-org," analyst Rohit Kulkarni said in a note.
"However, we do not believe that SNAP has a long-term sustainable competitive moat, given the history of user growth and engagement lumpiness."
Kulkarni also cited rising "competitive headwinds from TikTok and Instagram (Threads launch)" as factors that could weigh on the stock.
"Snap is trading at a premium valuation multiple to its peers and expected growth, implying high investor expectations over the near term, thus, we expect near- term choppiness in SNAP shares," the analyst wrote.
Snap shares were up 3.8% to $14.30 in premarket trading. The stock has doubled in the past year, based on Thursday's close, and has fallen 25% from its 52-week high of $18.36 in July.
The stock has 13 buys, 24 holds and three sells with an average price target of $18, according to Bloomberg data.
MKM also started coverage on Pinterest (PINS) with a neutral rating and estimates $29 as fair value for the stock.