Snapchat parent Snap, Inc. SNAP is scheduled to release its second-quarter results Thursday after the markets close. An analyst at KeyBanc Capital Markets has reduced the price target for shares just ahead of the quarterly earnings report.
The Snap Analyst: Justin Patterson maintained an Overweight rating on Snap shares and reduced the price target from $27 to $25.
The Snap Thesis: The ad market is characterized by pockets of stability and softness, with softness seen around the brand, display and less-scales social companies, analyst Patterson said, citing his channel checks.
The analyst lowered his second-quarter revenue estimate by 2% to $1.12 billion. June was incrementally worse than May, reflecting softness in key verticals, he noted. The analyst now models an EBITDA loss of $34 million compared to his previous estimate for a loss of $9 million.
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Given tightening around key verticals, including digital entertainment, fintech, e-commerce and consumer-packaged goods, Patterson reduced his revenue estimates for the third quarter as well as fiscal years 2022 and 2023.
The analyst attributed the price target reduction to expectations for more modest revenue growth.
Patterson said he would watch out for the following four factors:
- Vertical commentary and auction density
- Daily engagement
- Gross margin
- Operating expenditure
Snap Price Action: Snap was seen trading down 0.84% to $15.38 in premarket trading on Thursday, according to Benzinga Pro data.
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