Spotify and Snap Get Upgrades From Guggenheim

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Internet companies appear to be undervalued, according to a Guggenheim analyst, who on Monday upgraded Snap  (SNAP) – Get Report to buy from neutral and Spotify Technology  (SPOT) – Get Report to neutral from sell. 

Snap, parent company of Snapchat, was climbing 3.9% to $25.62 at last check, while audio streaming services company Spotify was advancing 1.1% to $238.53.

Guggenheim analyst Michael Morris raised his price target for the stock of both companies, increasing Snap to $28 from $22, while boosting Spotify to $250 from $232.

Morris said in a note to investors that he had revised his valuation framework for digital media companies to better reflect what he believes to be greater similarities between internet and software companies, according to The Fly.

This includes core investment in R&D and engineering resources and the creation of high-utility technology platforms.

Morris said he believes that at the core, internet companies are software development and distribution companies that largely focus on consumer rather than enterprise applications and he expects investors will continue to evolve their view to reflect this, which will drive incremental appreciation for internet stocks.

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