Should I buy Snap shares after Bank of America assigned a buy rating?

Snap Inc. (NYSE: SNAP) shares advanced more than 50% after the company reported a quarterly report that blew away Wall Street analysts’ estimates.

The fourth-quarter earnings results showed that Snap is moving in the right direction, and the company’s management expects another strong quarter.

Snap Inc. is an American social media company that develops and maintains technological products and services, namely Snapchat, Spectacles, and Bitmoji.

Snap reported strong fourth-quarter results this Thursday; total revenue has increased by 42.7% Y/Y to $1.3 billion, $100 million above expectations, while the Non- GAAP earnings per share were $0.22 (beats by $0.12).

The company’s results surpassed analysts’ consensus forecasts for a profit of $0.19 a share, on $1.2 billion in revenue.

This is the first time that Snap reported positive quarterly net income as a public company, and it is important to say that the number of daily active users has increased 20% year-over-year to 319 million.

The company’s business has proven improvements throughout the fourth fiscal quarter, and the company’s management announced that revenue for the next quarter should be between $1,030 billion and $1,080 billion vs. $1.02 billion consensuses.

This estimate represents an increase of as much as 40% compared with $770 million in sales that Snap achieved in the first quarter of 2021.

During the fourth quarter, Snap introduced several new platforms and programs for advertisers that will certainly help it to grow revenues in the 2022 fiscal year.

Bank of America upgraded the stock of Snap this Friday and assigned a buy rating with a $55 price target. Justin Post, an analyst from Bank of America, added:

Snap is a company with a bright future, but valuation is not overly attractive at current levels. The company still does not operate with a profit on a full-year basis, and it expects some headwinds impacting its business during the first quarter.

Snap shares advanced more than 50% after the company reported a strong quarterly report, and the current share price stands at $38.

The important support levels are $35 and $30; $40 and $50 represent the current resistance levels. If the price jumps above $45, it will signal trading Snap shares, and the next target could be around $50 resistance.

On the other side, if the price falls below $30 support, it would be a strong “sell” signal, and the next target could be around $25.

Snap reported strong fourth-quarter results this Thursday, and the company’s management expects another strong quarter. Bank of America upgraded the stock of Snap this Friday and assigned a buy rating with a $55 price target.

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