Snap finally has a friend on Wall Street.
Shares of Snapchat’s parent company rose 3.5 percent to $20.23 early Monday after they got their first “buy” rating from a bank analyst.
Monness Crespi Hardt initiated its coverage of the disappearing-photo app, recommending that clients Snap them up with a price target of $25.
Still, the relatively upbeat note to clients came with a few caveats.
“We recognize we are potentially giving too much credit for unproven skills in building a business, rather than just a product,” analyst James Cakmak warned.
Still, Cakmak added, “We see more to Snap than many suggest,” noting that Snap’s revenue growth has the potential to outstrip that of its peers.
Of the 12 analysts that now cover Snap, Cakmak stands alone with his buy rating. Six currently have the equivalent of a sell rating, while the remaining five rate Snap shares a hold.
Snap’s stock has attracted skeptics since its flashy debut on the New York Stock Exchange March 2, opening at $24 after pricing the previous night at $17.
While Snap notched an intraday high of $29.44 on March 3, the shares have been steadily pummeled since as analyst fret over the company’s slowing user growth, widening losses and an untested management team led by 26-year-old Chief Executive Evan Spiegel.
Snap’s current valuation is “rich under most scenarios” for an unproven model that marketers see as experimental, Youssef Squali, analyst at Cantor Fitzgerald, said in a research note last week.