Snap shares have received a significant boost, thanks to Deutsche Bank analyst Benjamin Black’s optimistic stance on the social-media company. Black has upgraded his rating on Snap from Hold to Buy and raised his target price from $10 to $19.
This upgrade is part of a broader bullish perspective on the future of digital advertising, especially as we enter the December-quarter earnings season. Black believes that the economic data and his ad-channel checks indicate increased confidence and willingness to spend by advertisers. He also notes that AI-based advertising tools are becoming more advanced, making it easier for advertisers to optimize their ad spend. Therefore, he expects the growth of the digital-ad industry in 2024 to be on par with that of 2023.
For Snap, Black identifies a strong catalyst for positive revisions to consensus Street estimates for both revenue and Ebitda (earnings before interest, taxes, depreciation, and amortization). He predicts that Snap will gain incremental revenue through Snapchat+, an ad-free version of the service that offers additional features at a monthly subscription of $3.99. Furthermore, Black anticipates improved performance from Snap’s “rebuilt” advertising platform, which will drive greater advertiser adoption.
In summary, this upgrade and optimistic outlook for Snap reflects the growing confidence in the digital advertising market. With favorable tailwinds and innovative strategies, Snap is expected to experience significant growth in the coming years.
Analyst Bullish on Snap’s Amazon Partnership and Advertising Growth
An analyst remains optimistic about Snap’s partnership with Amazon.com, allowing users to make purchases directly through the social media app. Additionally, the analyst sees potential growth in advertising from China.
Positive Outlook for Meta Platforms and Alphabet
Heading into the fourth-quarter reports from both Meta Platforms and Alphabet next week, the analyst maintains a positive outlook on their advertising prospects. Both stocks are rated as a “Buy.”
Meta’s Focus on Efficiency and AI Improvements
Meta has made significant progress in optimizing its cost structure, thanks to CEO Mark Zuckerberg’s Year of Efficiency initiative. The company has redirected the savings toward enhancing its artificial intelligence capabilities. As a result, monetization across Meta’s ad products has improved, leading to efficiency gains and increased allocation of ad budgets. The analyst raises the target price on Meta to $450 from $385.
Alphabet’s Growth Driven by Search, YouTube, and Gen AI Enhancements
Despite a 20% rally in Alphabet’s stock since its third-quarter results, the analyst believes there is still room for additional gains. The positive trends in digital advertising, combined with the benefits derived from “Gen AI enhancements,” continue to drive efficiency for ad buyers within Alphabet’s Search and YouTube platforms. The target price for Alphabet is raised to $168 from $145.
In Friday’s trading, Snap shares have edged up by 0.9% to $16.43, while both Meta and Alphabet show marginal declines.