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New Coverage For SNAP Coming Monday

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On Monday there will be a flood of research on recent IPO Snap Inc. (SNAP - Free Report) .  Right now, SNAP doesn’t have a Zacks Rank because the Rank is derived from earnings estimate revisions.

Who Will Initiate?

It is customary for an investment bank that is on the deal team for the IPO to provide research coverage as well.  That means Morgan Stanley, Goldman Sachs, JP Morgan, Deutsche Bank, Barclays and  Credit Suisse should all be expect to initiate coverage Monday morning.  Allen & Co was on the deal team but isn’t expected to provide research coverage.

The IPO

SNAP held its IPO on March 2 and began trading the next day.  The stock was priced at $17 and then opened for trading at $24 and quickly roared higher to $29.44 (the high for the day).  Since that time, the stock has drifted back lower but has shown some steady volume all along the way.

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Recent New Coverage

Today, Drexel Hamilton started coverage of the stock with a Buy rating and a $30 price target. I haven’t seen the report so I cannot give you any details about it.

Prior to pricing the offering, I see that Edward Jones initiated on the company but there was no rating or price target (or model).

Monness, Crespo, Hardt & Co analyst James Cakmak initiated on the company with a Buy rating on March 20.  A price target of $25 was set at that time, but it is unclear if the report contained a model or is even in the Zacks Research System.

What This Means For The Zacks Rank

The new coverage from several analysts means that we are only a few days away from getting a Zacks Rank.  Of course it isn’t too often that one should expect estimate revisions to occur, but when further new coverage changes the consensus estimate we could see movement in the Zacks Rank.

I would expect there to be a Zacks Rank on the stock by this time next week.

My View

Most of the investment banks will probably start the stock with a buy rating or whatever they use as the equivalent for that.  The key to me will be the price targets, will anyone go really far out on the limb and put a $35 target on the stock?  I don’t know about that, but look for the lead for the IPO to be among the most bullish.  I would not be surprised by a $32 target from Morgan Stanley.

The real question is should you buy this stock now before the reports come out?  With a few reports already floating around, I think it is pretty safe to say that we probably won’t see too much negativity.  That tells me that there is a decent risk reward for a short term trade in SNAP.  If you really like what the analyst reports have to say on Monday, then it could be a long term investment.

 

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