By Sam Boughedda
Snap (NYSE:SNAP) shares were maintained at Underweight, with the price target lifted to $10 per share from $8 by a Morgan Stanley analyst on Friday.
The analyst raised the price target based on Snap's recent better-than-expected August ad update and $500mn cost reduction plan.
"SNAP's 3Q revenue is tracking ahead of our prior expectations which, combined with $500mn in annual cost cuts, results in higher '22 and '23 EBITDA. Our '22/'23 revenue increases by 9% to $4.8bn/$5.5bn," wrote the analyst. "Our '22/'23 revenue forecast is informed by our monthly model, where we forecast 15%/17% growth in August/September leading to 11% 3Q growth followed by 10% 4Q growth. Y/Y growth comps ease 11%/15% in September/October, which should aid near-term growth."
Morgan Stanley expects a modest deceleration to 14% growth in '23 from 16% in '22, consistent with their broader U.S. online advertising forecast.
"We remain UW given high execution risk as SNAP undergoes key management change...while continuing to invest to improve its branded ad business and grow its performance advertising in the midst of a somewhat weak macro environment and an online ad space set to become more competitive," the analyst concluded.