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Stifel: The Good & Bad For Twitter's Advertising Business

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Twitter (NYSE: TWTR) was resumed at Stifel Nicolaus with a Hold rating and $44 price target.

The Good

Analyst Scott Devitt notes that advertising revenue has increased during three of the past four quarters. There may be more upside: “We believe increased uptake of complementary TV campaigns along with emerging formats like mobile application install ads could lead to revenue outperformance in the short-term.”

In addition, advertising through MoPub and TapCommerce could boost reach while limiting inventory concerns.

Related Link: Stifel's Case For $1,600 On Priceline

The Bad

User engagement and growth are slowing, which raises concerns about ad inventory.

“We believe product innovation driving improved reach / usage of the site may be necessary for Twitter to justify its current valuation.”

Price Action

The $44 price target was derived with a DCF and, “represents 14x 2015E EV / Sales and 66x 2015E EV / EBITDA.”

Shares of Twitter were last trading at $43.94, up 0.3 percent.

Latest Ratings for TWTR

DateFirmActionFromTo
Jul 2016Morgan StanleyMaintainsUnderweight
Jul 2016Goldman SachsMaintainsBuy
Jul 2016CitigroupMaintainsNeutral

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Posted-In: Scott Devitt Stifel NicolausAnalyst Color Price Target Initiation Analyst Ratings

 

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