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Snap Jumps as Pivotal Research Boosts Rating as Revamped Android App, New Lenses Lure Users

4:01 PM, Jun 6, 2019 — The parent company of social-media app Snapchat got a boost from Pivotal Research Group on Thursday, which said user growth has “prospectively” turned a corner after the revamp of its Android app and amid new offerings within the program.

The rating on Snap (SNAP) was raised to buy from hold and the stock’s price target was lifted to $17.25 from $13.15, Pivotal senior research analyst Michael Levine said in a note.

Shares in the company jumped nearly 7% in late trading.

Levine said he’s confident that the launch of Snapchat revamped app for Alphabet’s (GOOGL) Android mobile operating system “is doing well” although that was likely already anticipated by the buy side. By the end of the first quarter, the app was available to everyone and has resulted in a 6% increase in the number of users sending Snaps in the first week of upgrading, the company said in April.

“Less appreciated based on our industry checks, we think the latest launch of lenses is among some of the most impressive product innovation we have seen in some time from the company,” said Levine. Snapchat’s popular filters and lenses offer uses the chance to change and manipulate their appearance on the app.

Daily active users reached 190 million in the first quarter of this year, up from 186 million in the fourth quarter but slightly lower than 191 million in the same period of 2018. Pivotal sees 2019 full-year sales of $1.64 billion and $2.2 billion in 2020. Expectations are for a full-year loss of $0.15 a share before swinging to 2020 earnings of $0.03 a share.

Media buyers who concluded they didn’t need to add Snap to their marketing plans could change their views into the second-half of the year, and that could “serve as a catalyst under appreciated by investors,” Levine said.

Risks include user growth slowing faster than expected and declines in advertising and over saturation of online marketing within ad budgets, the analyst said.

Companies: Snap Inc.
Price: 13.83 Price Change: +0.89 Percent Change: +6.88

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