Snap underwriter Goldman Sachs defends social network as a 'unique asset' as shares crater

• Goldman Sachs and Credit Suisse reiterated their bullish long-term outlooks on Snap after the company's shares plunged on first-quarter earnings results.
• Both firms were underwriters in Snap's initial public offering.
• Analyst Heath Terry reiterated his $27 price target for Snap, representing 45 percent upside from Thursday's price.

The research arms of Goldman Sachs and Credit Suisse, both underwriter firms of Snap's initial public offering, told investors to focus on the long-term potential of the social media company and reiterated their buy recommendations on the stock in the wake of a very disappointing earnings season debut.

The company's shares were down 20 percent in early trading Thursday, a day after it reported disappointing first-quarter earnings results.

Snap posted first-quarter sales of $150 million versus the Wall Street consensus of $158 million. It also reported daily active users of 166 million for the quarter compared with 167 million expected by StreetAccount.

"While SNAP remains a near venture stage investment with all of the risks that implies, we continue to believe its audience and engagement represent a unique asset that will benefit from growth and diversification of internet usage and advertiser adoption as both mature," Goldman analyst Heath Terry wrote in a note to clients Thursday.

Terry reiterated his $27 price target for Snap, representing 45 percent upside from Thursday's price.

In similar fashion, Credit Suisse told clients to appreciate how rare and special Snap is in the industry.

"Snap is a scarce asset that offers advertisers access to a coveted younger demographic," analyst Stephen Ju wrote. "Our long-term investment thesis has not changed on the back of this report."

Ju reaffirmed his $30 price target for Snap. The analyst noted there were positive aspects to the company's report such as better-than-expected monetization of $1.81 average revenue per user (ARPU) in North America versus his $1.68 estimate. He cited how the North America's ARPU was more than seven times Europe's ARPU, a gap he predicts will shrink over time.

"Although we would certainly have preferred to have seen higher DAUs reported vs. our expectations and a higher reset to BOTH our revenue and Adj. EBITDA estimates, we settle for profit dollars for now," he wrote.

To be fair, the investment banking and research units of Wall Street banks have been separated by a wall since the early 2000s after they were accused of drumming up investment banking business with favorable research. So there should be no reason to believe that these firms were maintaining their bullish stance just because of the underwriting relationship.

Still, some skeptics say that Wall Street research is too bullish on the companies they do investment banking for and all companies in general. These reports won't do anything to dissuade that opinion.

Disclosure: NBCUniversal, the parent company of CNBC, is an investor in Snap.