Snap Inc.'s shares gained nearly 50% on Feb. 7, the day after the Snapchat parent reported stronger-than-expected financial and user metrics for its most recent quarter.
Several analysts upgraded Snap's stock following the earnings beat, though some remained cautious about the company's future growth prospects.
Barclays analyst Ross Sandler raised his price target for Snap to $21 from $18 in a Feb. 7 research note, citing higher-than-expected revenue and daily active users, among other factors. He predicted that accelerating user and revenue numbers would not be a one-quarter event, giving the stock room to climb higher this year. Shares of Snap closed Feb. 7 at $20.75, up 47.6% from the prior day.
SunTrust Robinson Humphrey's Youssef Squali upgraded Snap to "hold" from "sell" and raised his price target to $15 from $10 in a Feb. 7 research note, noting improved monetization of higher-than-expected DAUs. Squali said the fourth quarter of 2017 could mark "a potential inflection point" for Snap, with its shift to programmatic ad sales nearly complete. However, he also noted risks associated with the rollout of Snap's redesigned app and potential regulatory challenges stemming from the European Union's new data protection rules, which become law in May.
J.P. Morgan Securities' Doug Anmuth in a Feb. 7 research note upgraded Snap to "neutral" from "underweight," and raised his price target to $16 from $10. Anmuth said Snap's switch to an auction-based ad platform is yielding better results than anticipated and he is growing more optimistic about Snap's app redesign. "We still believe there is risk around the law of unintended consequences for such a heavily engaged user base, but some of Snap's early data is encouraging," he wrote.
Jefferies analyst Brent Thill raised his price target for Snap shares to $17 from $15 following its first earnings beat as a public company, but he said questions remain as to the overall trajectory of the business. "A good quarter doesn't change our fundamental view that Snap has its work cut out to continue to deserve a premium multiple," he wrote in post-earnings research note.
