UPDATE: MKM Partners Starts Snap Inc (SNAP) at Neutral

(updated to add comment)

MKM Partners analyst Rohit Kulkarni initiates coverage on Snap Inc (NYSE: SNAP) with a Neutral rating and a price target of $16.00.

The analyst comments "Over the past 12 months, SNAP has been executing well, and we see several near-term incremental catalysts including benefits from the Android app, premium content partnerships, a gaming platform launch, and sales re-org. However, we do not believe that SNAP has a long-term sustainable competitive moat, given the history of user growth and engagement lumpiness. Near-term, we believe competitive headwinds from TikTok and Instagram (Threads launch) are rising, as observed from Q3 mobile app downloads data. While SNAP’s growing focus on premium video is L-T positive, we think rev share agreements with content producers and marginally higher cloud computing costs for video increase downside risk for the Street's gross margin expectations for 2020. Snap is trading at a premium valuation multiple to its peers and expected growth, implying high investor expectations over the near term, thus, we expect nea rterm choppiness in SNAP shares as company fundamentals catch up to the shares' premium valuation."

For an analyst ratings summary and ratings history on Snap Inc click here. For more ratings news on Snap Inc click here.

Shares of Snap Inc closed at $13.67 yesterday.

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