DA Davidson raises Snap stock price target on revenue growth

DA Davidson has increased its price target for Snap Inc (NYSE: SNAP) stock to $5.75, up from $5.25, while keeping a Neutral rating. The shares are currently trading at $5.19, below the firm's Fair Value estimate. This suggests Snap may be undervalued. The company reported a 14% year-over-year revenue growth in its third quarter, slightly below the 1% consensus estimate.

Ad revenue grew by 4%, while other revenue surged 84%, driven by Snapchat+, Memories storage, and Lens+. Analysts project Snap to become profitable this year despite recent losses. The platform offers six more exclusive insights for SNAP investors. Ad revenue growth was fueled by strong direct response due to improved purchase outcomes, but upper funnel brand advertising declined year-over-year, dampening overall growth.

Snap has announced a shift away from daily active user disclosures, starting in the first quarter of 2027, and will instead provide global monthly active user disclosure and average revenue per monthly active user. Despite these changes, Snap will continue disclosing revenue by region. In recent earnings, Snap reported adjusted earnings per share of $0.03, exceeding Wall Street's estimate of $0.01, but revenue of $1.72 billion lagged behind the expected $1.73 billion, marking a 14% year-over-year growth.

Some analysts, like Cantor Fitzgerald, lowered Snap's price target to $5.00 while maintaining a Neutral rating, while Mizuho kept a Neutral rating and a $6.00 price target, noting revenue below consensus estimates. B.Riley reduced its price target to $8.00 from $10.00 but maintained a Buy rating, highlighting strong operating leverage.

Total daily active users were slightly below expectations, with flat growth in North America and Europe. These events expose ongoing challenges for Snap in the advertising sector. This report was AI-generated and reviewed by an editor.