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Pro Analysis

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
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.

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.