Pivotal Research Downgrades Twitter To Hold, Cites Valuation Concerns

In a report published Wednesday, Pivotal Research Group analyst Brian Wieser downgraded shares of Twitter Inc TWTR to Hold from Buy with an unchanged $51 price target as shares reached a price considered to be "fair." Wieser stated that when he upgraded shares of Twitter to Buy from Hold in December, weakness in shares were "clearly overdone" despite investor concerns over the company's prospects. The analyst added that Twitter's "unique qualities" as a consumer and advertiser platform stood out favorably at that time and continue to do so. However, shares have risen 47 percent in the past three months and the analyst suggested "it is time to take money off the table" as momentum could reverse itself. The analyst pointed out Tuesday's large upwards move as being "somewhat extreme" as recent news that Twitter would be launching auto-play video ads should already have been included in estimates. "Other positive news could, of course, bring the stock yet higher in the near-term, and we remain convinced that Twitter maintains long-term value for investors with extended time horizons," Wieser wrote. "Still, given the venture stage company-like nature of Twitter's business and the associated volatility that is exhibited by the stock, we would rather wait and see tangible factors emerge which would help justify a high enough year-end 2015 price target to warrant a Buy rating at a future point in time." Bottom line, despite a favorable view of the company's operations, a ratings change is often necessary.