Ahead of Snapchat’s much-anticipated IPO, Needham analyst Laura Martin is out today with a new research note, comparing between Facebook Inc (NASDAQ:FB) and Snapchat before they went public. Martin rates Facebook shares a Buy, with a price target of $150, which implies an upside of 12% from current levels.
The analyst wrote, “A key distinction between FB and SNAP at IPO date is that FB reported positive 27% net income margins in the year before going public while SNAP lost $514mm (up 38% y/y). However, SNAP is growing revenue much faster, up 589% y/y vs FB’s 88% y/y revenue growth the year before its IPO.”
Martin continued, “We were most intrigued by SNAP’s words: “Many of our products are data intensive and work better on high-end mobile devices” and “our products often use technologies that demand a lot of processing power” and therefore “our users tend to be located in markets with high-end mobile devices and high-speed cellular internet.” FB’s broader approach suggests a longer growth runway and upside revenue potential from all countries globally.”
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Laura Martin has a yearly average return of 18.2% and a 69% success rate. Martin has a 32.2% average return when recommending FB, and is ranked #79 out of 4430 analysts.
Out of the 48 analysts polled in the past 12 months, 43 rate Facebook stock a Buy, while 5 rate the stock a Hold. With a return potential of 18%, the stock’s consensus target price stands at $157.72.