Snap Inc SNAP shares climbed on Wednesday after the company reported upbeat third-quarter results.

The company reported its results amid an exciting earnings season. Here are some key analyst takeaways.

Cantor Fitzgerald On Snap

Analyst Deepak Mathivanan maintained a Neutral rating while raising the price target from $8 to $9.

Snap reported its adjusted EBITDA ahead of expectations, with the beat being driven by better cost management, Mathivanan said in a note. The company's fourth-quarter guidance is better than feared, he added.

While initial testing of Simple Snapchat is "showing decent gains in select markets" and new DR (direct response) products are "delivering promising results," the company's revenue growth continues to be impacted by headwinds in the brand business, despite stable DR growth, the analyst stated.

"Looking ahead into FY25E, there are still plenty of uncertainties on SNAP's revenue-growth trajectory," he wrote.

B. Riley Securities On Snap

Analyst Naved Khan reiterated a Neutral rating while lifting the price target from $11 to $12.

Snap reported third-quarter revenues and adjusted EBITDA of $1,373 million and $132.0 million, surpassing consensus of $1,358 million and $92.7 million, respectively, Khan said. Brand revenues remained weak, down 1% year-on-year, and management does not expect a meaningful turnaround for the holiday season, he added.

DR ads benefit from increasing adoption by small and medium businesses, with revenues growing 16%, the analyst stated. The company's fourth-quarter guidance "looks light on revenue and reflects caution given the risk of disruption from the rollout of Simple Snapchat to select markets and users, as well as exposure to upper funnel ad spend in the seasonally strong 4Q," he further wrote.

JMP Securities On Snap

Analyst Andrew Boone reaffirmed a Market Outperform rating while lowering the price target from $17 to $16.

Snap reported in-line third-quarter results, with a slight revenue beat and EBITDA ahead of consensus by $32 million, which was in-line with past beats, Boone said. The high end of the fourth-quarter revenue guidance met consensus, he added.

Snap plans to begin testing Sponsored Snaps "more earnestly" in the fourth quarter, while DR growth of 16% year-on-year was consistent with that in the previous quarter, "despite a 10-point tougher comp," the analyst stated. "Simple Snapchat is driving engagement for less engaged users but iOS users see less benefit," he further wrote.

BofA Securities On Snap

Analyst Justin Post maintained a Neutral rating while lifting the price target from $13 to $14.

"DR growth was driven by strong demand for 7-0 Pixel Purchase optimization solutions and growing contribution from App Purchase optimization," Post wrote. Snap added 11 million DAUs (daily active users), with the number rising to 443 million, he added.

Snapchat+ subscribers stood at 12 million, slightly below Street expectations of 12.4 million, and growth decelerated, the analyst stated. Snap managed to beat third-quarter expectations on better cost management, "but challenges remain," he further wrote.

Piper Sandler On Snap

Analyst Thomas Champion reiterated a Neutral rating while raising the price target from $12 to $13.

"Relative to our estimates, North America was below expectations while EU/ROW were better," Champion said.

Around 10 million users are now testing a more simplified version of the Snapchat application, "skewing toward lower monetizing geographies," the analyst stated. "The margin picture remains mixed with COGS (cost of goods sold) now pushing a $2.6BN run-rate," he wrote.

Truist Securities On Snap

Analyst Youssef Squali maintained a Hold rating, while raising the price target from $13 to $14.

Snap's third-quarter results and fourth-quarter guide reflect "good traction in DR and Snapchat+ offset by softness in Brand advertising, all against a backdrop of improving margins," Squali said.

"This suggests that changes to the ad products are starting to resonate with the growing roster of advertisers (esp. SMBs) but execution remains uneven Q/Q," the analyst wrote. With DAUs in the US remaining flattish and North America, the highest monetization region, witnessing weaker Brand spend, Snap continues to lose share in the digital ad market, he added.

Check out other analyst stock ratings.

Goldman Sachs On Snap

Analyst Eric Sheridan reiterated a Neutral, while lifting the price target from $12 to $13.50.

Snap's quarterly revenues were "modestly" higher than expectations, with DR initiatives and other revenues like from Snapchat+ "outweighed lingering brand advertising headwinds, Sheridan said.

The company achieved a "solid outperformance" on gross margins and adjusted EBITDA, driven by lower infrastructure costs per DAU and continued discipline in operating expenditure, the analyst stated. He added, however, that management commentary implied that the company "remains committed to investing behind long-term growth initiatives (AI/ML, product development, partner content costs, etc.)."

RBC Capital Markets On Snap

Analyst Brad Erickson maintained a Sector Perform rating and price target of $16.

"Direct response (DR) growth remains the outperformer with the company’s relatively newer 7-0 attribution/optimization too being a partial driver," Erickson wrote in a note. Snap's improved optimization tools "are vital" for the platform to "prove structurally higher value" for small and medium businesses, he added.

"The new app redesign (Simple Snap) and new ad units (Sponsored Snaps and Promoted Places) are all up and testing with a fuller expected rollout likely in early ’25 where management’s tone on creating incremental reachability for advertisers was bullish," the analyst stated. Prospects of a ban on TikTok in 2025 "may look incrementally compelling," he further said.

BMO Capital Markets On Snap

Analyst Brian Pitz reaffirmed an Outperform rating and price target of $18.

"DR budgets once again grew quicker than the overall given a simplified advertiser UI and continued growth in time spent," Pitz said. Stabilization in North American engagement in the third quarter is "a net positive," as Snap begins to roll out Simple Snap in the first half of 2025, he added.

Simple Snapchat is likely to have a positive impact on the monetization of Snap’s growing MAUs (monthly active users) approaching 1 billion, the analyst stated. Spotlight ended the quarter with 500 million MAUs, up 21% year-on-year, "creating a favorable set-up" in 2025, "as the tab integrates with Snap’s highest monetizable surface, Stories," he further wrote.

Roth Capital Partners On Snap

Analyst Rohit Kulkarni reiterated a Neutral rating and price target of $14.

Snap shares climbed more than 10% after the company reported "a small topline beat and a medium-sized EBITDA beat, offset by a 4Q outlook in-line/below expectations," Kulkarni said.

"We are marginally positive about Snap’s progress in attracting SMB advertisers and growing its DR business, however, we are getting increasingly worried about Snap’s ability to grow Brand revs consistently over several quarters," the analyst wrote.

Benchmark On Snap

Analyst Mark Zgutowicz maintained a Hold rating on the stock.

Snap's quarterly results "brought some calm back to the stock," following the volatility in the second quarter, Zgutowicz said. The stock responded to the company's "continued focus on expense management and SMB penetration leveraging initial audience engagement products like Snap Promote, with testing underway on Sponsored Snaps and Promoted Places," he added.

Revenue generated by Snap's upper funnel, large brand clients, "remains challenged, weighing most heavily on its N[orth] America segment," the analyst wrote. He further stated that the weakening trend in Brand spend could continue in the fourth quarter and into the first half of 2025.

Oppenheimer On Snap

Analyst Jason Helfstein reiterated a Perform rating on the stock.

Snap's shares rose more than 10% in the after-hours session on an improved margin and cost outlook, "despite lackluster US ad revenue growth," Helfstein said.

Management is likely to face the "difficult decision between ramping investments to keep up with competition and margin expansion," he added.

SNAP Price Action: Shares of Snap had risen by 16.99% to $12.74 at the time of publication on Wednesday.

Read More:
• Snap Touts New Ad Formats And ‘Simple Snapchat’ — 10M Users Trial Growth-Driving Feature

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