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Mizuho Initiates Snap With Mixed Feelings

The reserved sell-side reaction to newly IPO-ed Snap Inc  continued Friday with an initiation from Mizuho. The firm started Snap with a Neutral rating and $20 price target.

A survey of more than 1,000 Snap users by Mizuho found that 79 percent open the app more than twice a day. Twenty-one percent use Snap more than 15 times a day, an engagement level analysts Neil Doshi and San Q. Phan said is “quite astonishing.”

Sixty-four percent of those avid users, though, said they “hardly ever” click on an ad in Snap, according to Mizuho — demonstrating the hill Snap has to climb.

“In our view, Snap will need to materially improve its advertising targeting and ad quality to increase ad loads without diminishing the user experience,” Doshi and Phan said.

Snap, which has approximately 158 million daily users, was priced at $17 in its March 1 initial public offering.

The Mizuho analysts projected Snap will generate positive operating income by 2020.