Analyst: Snap Stock Boasts "Strong Catalyst Path"

From a contrarian angle, Snap stock is all but poised to skyrocket

Deputy Editor
Jan 26, 2024 at 10:27 AM
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Shares of Snap Inc (NYSE:SNAP) are 3% higher this morning, last seen trading at $16.79 this morning after Deutsche Bank upgraded the stock to "buy" from "hold" and raised its price target by $9 to $19 -- a more than 16% upside to last night's close.

In its bull note, the Wall Street brokerage said Snap stock has a "clear, strong catalyst path towards upwards revenue and EBITDA revisions." Deutsche also mentioned Snapchat+, which surpassed 7 million subscribers last month, as well as the company's November partnership with Amazon.com (AMZN) that allows Snapchat users to buy certain products offered by the e-commerce behemoth.

There's plenty of room for analysts' sentiment to shift. Despite a nearly 60% year-over-year lead, 24 of 32 covering brokerages rate SNAP a "hold" or worse. More price-target hikes could also be overdue, considering the 12-month average price of $14.71 is a 13.2% premium to yesterday's close. Plus, the 94.81 million shares sold short account for 7.5% of Snap stock's total available float.

Puts have been much more popular than usual over the past couple weeks. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day put/call volume ratio ranks higher than 94% of readings from the past year. An unwinding of options traders' pessimism could provide even more tailwinds.

Thanks to today's pop, Snap stock is trading back above its 20-day moving average, which was a line of guidance from late-October to mid-December. The equity ran out of breath just below the $18 level last month, and the $17 mark has acted as resistance on a closing basis since the beginning of the year. 

 

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