Snapchat parent Snap Inc. has plenty of room to the upside if an analysis from Goldman Sachs proves correct.
In a note on Monday, Goldman reiterated its Buy rating on Snap and set a $70 price target, representing potential upside of 45% from Monday's close.
The note helped boost shares of Snap as high as 11% in Tuesday trades.
Goldman believes recent initiatives from Snap including a number of tech innovations and product partnerships, combined with a favorable macro backdrop for online advertising, will "increase the likelihood of revenue growth acceleration well beyond consensus forecasts in Q4 and beyond," according to the note.
Snap is broadening its advertiser base and user engagement on its sharing platform continues to grow, Goldman noted.
"Snap's Spotlight product, new ad campaign objectives and bid types, and the Unity partnership, have the potential to drive further momentum in engagement growth as well as provide valuable scale to advertisers," Goldman said.
Furthermore, Goldman's channel checks suggests Snap will be able to exceed its own growth forecasts.
"Our checks with advertisers, along with recent third party app data, suggest that brand and direct response strength has continued into the holiday season despite uncertainty around the impact of the November elections and resurgence in COVID-related lockdowns, driving potential upside to the 47%-50% y/y growth that management noted was attainable if the holiday season materialized in-line with prior years," Goldman explained.
"We now expect revenue growth of 58% y/y, reflecting that strength," Goldman added.
Shares of Snap have surged 196% year-to-date as of Thursday's close.
