Snap surges 10% after analyst says Wall Street is underestimating the company's growth potential

Snap shares jumped as much as 10% on Tuesday after an analyst at BTIG increased his price target for the company to $20 from $15.

Author Richard Greenfield said Wall Street is underestimating Snap's user growth potential.

The report also pointed to accelerating user growth and monetization as support for BTIG's 'Buy' rating on the stock.

Watch Snap trade live.

Wall Street seems to be buying into Snap's turnaround plan.

The company's shares surged as much as 10% on Tuesday afternoon after a team led by BTIG analyst Richard Greenfield increased its price target for the stock to $20, up from $15. BTIG has had a 'Buy' rating on Snap since March 2019.

“We believe street expectations for user growth and revenues/EBITDA are simply too low, with far too many investors continuing to ignore Snapchat's recovery,” Greenfield said.

In early April, Snap announced the Snap Audience Network, a mobile ad network that would allow businesses to deploy ads across different apps. Greenfield said Snap's more open approach to engaging third-parties on its platform and its new ad products are boosting monetization.

Greenfield revised his estimate for Snap's 2019 revenue up to $1.68 billion from $1.65 billion. Adjusted EBITDA is was revised to a loss of $253 million, up from a loss of $268 million.

Snap's new gender and age swap filters are also driving user excitement and helping to increase daily active users, according to Greenfield. The company's DAU's decreased to 190 million in the first quarter of 2019 from 191 million during the same period last year.

Greenfield also said Snap has set the bar low for what Wall Street should expect from the company.

“Snapchat has done a good job keeping expectations low, enabling them to outperform expectations,” Greenfield said.

Snap is up more than 160% this year.