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Why Snap Stock Snapped 6% Higher Today

By Rich Smith - Jan 17, 2020 at 12:28PM

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UBS ups its price target by 50%.

What happened

Shares of Snapchat owner Snap (SNAP -0.95%) shot up nearly 6% in early trading Friday and remain up 4.1% as of 11:45 a.m. EST, goosed by positive comments from two of Wall Street's best-known investment banks.

As reports today, first UBS upgraded Snap shares to buy with a $24 price target (up 50% from its previous price target of $16). Then Wells Fargo followed suit with a 25% price target hike of its own -- to $20 a share.

Fingers snapping

Image source: Getty Images.

So what

What is it that has Wall Street so excited about Snap? In a word: growth. And also margins.

Wells Fargo says it sees Snap increasing revenues more, and for longer, than it previously expected, and expanding profit margins on those extra revenues as well. (Wells maintained its actual rating of Snap stock, though, at "equal weight.")

UBS was even more optimistic. Saying that Snap has positive momentum on both user growth and the revenue it gives rise to as it enters 2020, UBS predicts this momentum will not just persist through this year but also evolve into a "multi-year" trend.

Now what

Are these analysts right? Only multiple years' worth of time will tell for sure, but we won't have to wait long for our first clue. Snap is due to report Q4 and full-year 2019 earnings results less than three weeks from now, on February 4. Analysts believe the company will have reversed last year's Q4 loss to report a $0.01-per-share profit this time around -- and that it will have increased its revenues 44%.  

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