The banks that were in charge of Snap's IPO love it — even after the company's disastrous earnings report (SNAP)

pulse

May 11, 2017 5:25 PM

Goldman Sachs and Morgan Stanley, the banks that led Snap's initial public offering, are also among the company's biggest cheerleaders.

Snapchat cofounders Bobby Murphy, left, and CEO Evan Spiegel at the New York Stock Exchange as the company celebrated its initial public offering on March 2.

The banks that led Snap's initial public offering are also among the company's biggest cheerleaders.

The colead bookrunners Goldman Sachs and Morgan Stanley maintained their buy ratings on Snap and left their price targets unchanged, even after the company reported disappointing earnings that saw user growth slow to its lowest pace in years.

Here are the key elements of Morgan Stanley's bull case, as laid out in a client note:

And here's a breakdown of Goldman's view:

Deutsche Bank, which also served as an underwriter on the IPO and received the fourth-most shares after the offering priced, also has a buy rating on Snap's stock and a price target of $23. The firm said it still believed in "the management team's ability to innovate on product and ultimately grow and monetize the user base."

But not all of Snap's underwriters are so optimistic. JPMorgan, which got the third-most shares following the IPO, lowered its price target to $20 from $24, maintaining a hold rating on Snap's stock. Barclays, which received the fifth-most shares, lowered its price target to $18 from $24, while keeping a neutral rating.

Overall, of the 35 firms that cover Snap, 13 have assigned the equivalent of a buy rating, while 17 think the stock is a hold and five have issued the call to sell. The average price target among the analysts is $21.71, about 15% above the stock's level on Thursday.

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