“Be greedy when others are fearful,” investing titan Warren Buffett famously said.
That’s the logic some Wall Street firms are trying to apply to Snap’s stock. Even though shares dipped over 20% following the camera company’s disappointing first earnings report as a public company, Cantor Fitzgerald and Oppenheimer raised their rating on Snap.
“In our view, this is an extreme overreaction, but it also presents an excellent buying opportunity at just above Snap’s $17 IPO price,” wrote Drexel Hamilton’s Brian White, who says the stock is a “Buy” with a $30 price target.
The problem, argues White, wasn’t that Snap’s results were weak, but that expectations were too high.
“If we strip away the Street estimates that were created with no guidance from the company, Snap reported strong growth this week,” he said.
Similarly, Cantor Fitzgerald’s Kip Paulson also noted that the sell off made Snap’s stock look more attractive. Paulson raised its rating to the equivalent of “Hold” from “Sell,” but lowered the company’s target price to $17 from $18.
“Valuation has improved post sell-off,” Paulson said in a note seen by CNBC.
Oppenheimer also raised its rating from “Hold” to “Outperform” following the sell off. Oppenheimer’s Jason Helfstein noted that gross profits were higher than expected, partly due to lower cloud costs, according to CNBC.
Not all on Wall Street were excited to buy into the dip. J.P. Morgan for example kept its “Hold” rating on the stock, and lowered their 12 month target price on Snap to $20 from $24 previously. Deutsche Bank also tempered its expectations, lowering its price target to $23 from $30, but maintained its “Buy” rating.
Snap’s stock is up roughly 7% in trading Friday — helping CEO Evan Spiegel regain at least part of his net worth dropped in Thursday’s sell off.