Here's why the most bullish Snap analyst on Wall Street loves the stock

A stuffed ghost rests on a trader's screen above the floor of the New York Stock Exchange after Snap listed its IPO in New York, March 2, 2017.
Lucas Jackson | Reuters

RBC Capital Markets initiated coverage on Snap shares with an outperform rating, predicting sales to double each year for the next three years.

"Snap has become an innovation leader – for both consumers and advertisers – in arguably the single fastest advertising medium today – mobile," analyst Mark Mahaney wrote in a note to clients Monday. "We believe that if it sustains its current level of innovation, it can sustain premium growth for a long time and scale to profitability."

Snap shares are up roughly 40 percent from its early March $17 IPO offering price through midday Monday. But the stock is off 19 percent from its high price of $29.44, which occurred during its second day of trading.

The analyst's Snap price target is $31, representing 36 percent upside from Friday's close. He has the highest price target on the company, according to FactSet.