Credit Suisse Ahead Of Snap's Q2 Earnings Report: Outperform Rating Maintained

Shares of Snap Inc SNAP hit a new all-time low of $16.95 on Monday, marking the first time ever the stock traded below its initial public offering price of $17.

But that doesn't mean all analysts are throwing in the towel. Credit Suisse's Stephen Ju maintains an Outperform rating but with a price target lowered from $30 to $25 ahead of the company's earnings report in early August.

What's most important for investors to remember is that nascent companies "sometimes grow in fits and starts," Ju argued. The longer-term picture is encouraging and the social media platform and hardware company will benefit from two themes: 1) better access to the younger demographic and 2) improving ROI/measurability.

Moreover, at below $17 per share, Snap's stock represents a favorable risk to reward profile with further downside potential of just 13 percent but upside potential of 45 percent, the analyst emphasized.

Also important to keep in mind is the fact that approximately 711 million shares could come into the market after a standard lock-up period. As such, investors should expect higher levels of volatility in the near term.

Bottom line, although Snap hasn't demonstrated a "more comfortable growth path" it is still a "scarce asset" that better targets the coveted younger demographic better than its social media peers which can translate to margin expansion over time.

At time of publication in Tuesday's pre-market session, shares of Snap were seen down 4.06 percent at $16.30.

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