Wunderlich Says Twitter Is Set Up For A Strong Q4 Print

Blake Harper of Wunderlich on Wednesday commented in a note that Twitter Inc TWTR is expected to report a strong fourth-quarter results, even though user growth still remains a concern.

“Twitter made a strong case at its Analyst Day that it has and can monetize a much larger audience than its 284 million logged monthly active users,” Harper wrote. “While we believe the company does have incremental reach beyond its monthly active users, we question the ability to monetize those users at the same rate and efficiency that the monthly active users are.”

Harper suggests that Twitter's acquisition hunt will continue following its deal to acquire Indian-based ZipDial to improve its ad suite and monetization. The analyst adds that it makes sense for Twitter to target emerging markets with a mobile ad product.

Harper also expects Twitter to use its TwitterOffers to generate more commerce activity on its platform as social commerce is still a “nascent category” but does hold “enormous potential.”

However, Harper does state that the company does hold a lot of potential, but shares appear to be fully valued at 11x EV/s, 46x EV/EBITDA and 106x P/E on the analyst's 2015 estimates.

Shares are Hold rated with a $45 price target.