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April 3, 2020, 1:33 p.m. EDT

Should Investors Buy Snap Stock amid COVID-19?

Apr 03, 2020 (Market Realist via COMTEX) -- On Thursday, Snap (NYS:SNAP) stock rose 0.5% and closed at $11.27 with a market cap of $16.0 billion. The stock price has fallen 5.7% in the trailing five-day period, while it has risen 0.5% in the trailing 12-month period.

Currently, Snap stock is trading 43.0% below its 52-week high of $19.76 and 42.84% above its 52-week low of $7.89. On a YTD (year-to-date) basis, the stock has fallen by 31.0% as of Thursday.

Analysts' ratings for Snap stock

Earlier today, Goldman Sachs analyst Heath Terry reduced his target price on Snap stock from $20 to $16 but maintained a "buy" rating. According to a report from TheFly , "The analyst reduced Snap's estimates to account for the impact of the COVID-19 crisis and the anticipated recession. However, improving user engagement indicators, in conjunction with Snap's improving advertising technology and more favorable advertiser exposure, sets up the company to outperform peers on a revenue growth basis in 2020 and beyond." The report also said, "The analyst believes Snap's relative insulation from broader digital ad market declines will allow management to continue to invest in growth and maintain ample liquidity through the rest of the year."

Earlier this week, Suntrust Robinson analyst Youssef Squali reduced its target price on Snap stock from $18 to $12 with a "hold" rating. Squali also lowered his fiscal 2020 revenue outlook to $1.72 billion from $2.41 billion due to the impact of the coronavirus outbreak. JMP Securities cut its target price on the stock from $22 to $19, while UBS reduced it from $24 to $16.

Among the 42 analysts covering Snap stock, 25 analysts recommend a "buy"--up from 21 in the previous month. About 16 analysts recommend a "hold"--down from 20 in the previous month. One analyst recommends a "sell"--unchanged from the previous month.

Currently, analysts have a 12-month target price of $17.53 on Snap stock. On Thursday, the stock was trading at a discount of 55.5% to analysts' 12-month target price. Also, the stock's median target price was $17.00 on the same date.

As of Thursday, Facebook (NAS:FB) and Pinterest (NYS:PINS) have average broker target prices of $230.15 and $26.57, respectively. These figures imply returns of 45.5% and 93.9%, respectively, over the next 12 months.

Snap's growth projection

Snap reported sales of $1.7 billion in 2019--a rise of 45.4% YoY (year-over-year) from sales of $1.2 billion in 2018. The company reported an adjusted EPS of -$0.16 in 2019 compared to -$0.47 in 2018. Wall Street analysts expected the company to report sales of $1.7 billion and earnings of -$0.19 in 2019.

In the fourth quarter of 2019, Snap reported global DAUs (daily active users) of 218 million and an average revenue per user of $2.58. Wall Street analysts expected the company to report global DAUs of 215 million and an average revenue per user of $2.62.

Wall Street analysts expect Snap to report sales of $447.96 million in the first quarter. The figure would mark an increase of 39.8% YoY compared to $320.43 million in the first quarter of 2019. Also, analysts expect the company to report an adjusted EPS of -$0.07 in the first quarter compared to -$0.10 in the first quarter of 2019. Currently, analysts expect a 29.4% and 34.7% rise in the company's 2020 and 2021 revenues, respectively. Analysts also expect an adjusted EPS of -$0.01 and $0.23 in 2020 and 2021, respectively.

Snap's stock returns

On Thursday, Snap stock was trading 4.2% above its 20-day moving average of $10.82. Meanwhile, the stock is trading 21.5% below its 50-day moving average of $14.35 and 25.5% below its 100-day moving average of $15.12. The stock's 14-day relative strength index score of 43 implies that it isn't oversold or overbought.

On Thursday, Snap stock closed near its middle Bollinger Band level of $10.91. The value implies that the stock isn't oversold or overbought. Snap's 14-day MACD is 0.42, which indicates that the stock is on an upward trading trend.

Snap stock fell 2.2% at 10:48 AM ET today. Facebook and Pinterest shares have fallen 2.3% and 0.8%, respectively. The S&P 500 and the Dow Jones Industrial Average fell 1.0% and 1.2% at the same time, respectively.

Read How Snap Stock Looks as It Enters a Downturn to learn more.

COMTEX_364167948/2648/2020-04-03T13:33:29

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