Here’s what Wall St. experts are saying about Snap ahead of earnings

Snap (SNAP) is expected to report results for its fourth quarter on Tuesday, February 4, with a conference call scheduled for 5:00 pm EDT. What to watch for:

SELF-HELP STORY: Ahead of quarterly results, Bernstein raised the firm’s price target on Snap to $12 from $11 and keeps a Market Perform rating on the shares. Snap continues to shift focus on bottom-of-funnel objectives at the expense of brand-spending, the firm notes. If brand spend recovers – perhaps tied to TikTok-related uncertainty – alongside DR traction and continued Snapchat+ growth, there may be a self-help story here for 2025, argues Bernstein.

ALL EYES ON TIKTOK’S FATE: Wells Fargo also raised the firm’s price target on Snap to $15 from $14, while keeping an Overweight rating on the shares ahead of quarterly results. The firm notes that all eyes today are on the fate of TikTok in the U.S. There should be better visibility into this outcome by the time of Snap’s earnings. The market seeking insights into app redesign as the next potential catalyst, Wells adds.

INTENSE COMPETITION: Last month, BMO Capital lowered the firm’s price target on Market Perform-rated Snap to $16 from $18. Competition for Snap “remains intense” with Instagram, YouTube, and TikTok, which prompts BMO to lower estimates. The firm says its channel checks indicate that Snap advertising spending growth “remains modest.” However, advertiser adoption for Sponsored Snaps is gaining momentum, which creates a positive setup for 2025, contends BMO.

NEW AD FORMATS: Snapchat’s new ad formats Sponsored Snaps and Promoted Places are ramping, which should be a tailwind to advertising revenue in 2025, JMP Securities told investors last month. The firm believes Sponsored Snaps can reach more than $180M of incremental run-rate revenue, and says Promoted Places are an additional benefit to 2025 revenue estimates. JMP has an Outperform rating and $16 price target on the shares.

OUTLOOK: During the last earnings conference call, Snap said it saw Q4 revenue in the range of $1.51B-$1.56B, and Q3 adjusted EBITDA of $70M-$100M.

The company said at the time that, “As we enter Q4, we anticipate continued growth of our global community and our Q4 guidance is built on the assumption that DAU will be approximately 451 million in Q4. We are excited about the potential for Simple Snapchat, Sponsored Snaps, and Promoted Places to contribute to top line growth over time. In particular, we are encouraged by early testing results that show content engagement gains among less frequently engaged users of Snapchat as we believe this can be an important input to impression growth and incremental reach for advertisers. While we believe growth in content engagement and demand for the new ad placements may build over time, many of the changes associated with Simple Snapchat occur immediately as Snapchatters transition to the new user experience, which presents the risk of near term disruption. While we do not currently anticipate a broad roll-out of Simple Snapchat in our most highly monetized markets until Q1 at the earliest, we have now begun limited testing in these markets and may further expand this testing as we move through Q4. In addition, upper funnel advertising from large enterprise clients has historically been an important component of demand in Q4, and this portion of the business has been underperforming our overall ads business in recent quarters. Given these factors, our Q4 guidance range for revenue is $1.510 billion to $1.560 billion, implying year-over-year revenue growth of 11% to 15%.”

Current consensus EPS and revenue forecasts for Snap’s fourth quarter stand at 14c and $1.55B, respectively, according to data from Yahoo Finance. The consensus EPS and revenue forecasts for Snap’s full year 2024 stand at 26c and $5.35B, respectively.

SENTIMENT: Click here to check out Snap’s recent Media Buzz Sentiment as measured by TipRanks.