Twitter Moving On Wells Fargo Comments
Shares of Twitter (NYSE: TWTR) are trading a little higher in Tuesday’s pre-market, following an upgrade by Wells Fargo. Wells Fargo raised its rating from Underperform to Market Perform and kept its $36 to $39 price range.
“We believe shares are trading at a more balanced risk/reward ratio at its current valuation… Though a premium to its peers, we believe our range is supported by Twitter’s strong monetization ramp, new product introductions, and broad advertising interest. While we remain concerned about user growth and engagement, we believe street applications have declined substantially following following two quarters of relatively modest user growth.”
Wells Fargo also emphasized concern about user growth and engagement; the research house expects 267 million active users for the second quarter of 2014, roughly in line with Wall Street’s estimates.
“We believe declining tweeting activity of older user cohorts could present downside risk, as advertising ROI could suffer if the mix-shift to lower-value ‘readers’ continues. This is due to our continued belief that the retweet is the most valuable engagement metric in the eyes of advertisers, and that by definition non tweeters are also non retweeters.”
Wells Fargo’s $36 to $39 price range is based on 54 times EV/2015 EBITDA. Shares of Twitter were last trading up 0.38 percent to $34.60.
Disclosure: Luke Jacobi is long Twitter
Latest Ratings for TWTR
|Oct 2014||JP Morgan||Upgrades||Neutral||Overweight|
|Sep 2014||Canaccord Genuity||Initiates Coverage on||Buy|
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