Everything Wall Street Has Said About Twitter This Week
Twitter Inc (NYSE: TWTR) is scheduled to report its first quarter results on Tuesday after market close.
Here is a roundup of commentary from Wall Street's top analysts.
Wedbush: Focus On Users And Engagement
Shyam Patil of Wedbush commented in a note on Monday that Twitter is expected to report upside in its first quarter report. The analyst continued that revenue and profitability are important figures, investors should focus on user growth (arguably the most important metric for the business) and engagement.
Patil estimated Twitter will report total monthly active users of 302.4 million (an increase of 19 percent year over year, less than the 20 percent gain recorded last quarter) with 66.2 million users in the U.S. and 236.3 million internationally.
Shares are Neutral rated with a $50 price target.
Wunderlich: A Lot Of Good News Already Priced In
Blake Harper of Wunderlich commented in a note on Monday that Twitter is likely to report "strong" financial results driven by advertiser adoption and improving monetization, which should be large enough to overcome foreign exchange headwinds.
Harper also noted that Twitter has expanded its reach with a redesigned homepage that creates a "new experience" for logged out users. The company will continue to "iterate" and "tweak" its service to improve user and monetization growth and pull its data business closer in house after closing its API access to former partners.
The analyst added that Twitter faces a larger longer-term opportunity in controlling and selling its own data and outputs, but with shares trading at 9x EV/S, 34x EV/EBTIDA, and 663x P/E on his fiscal 2016 estimates, "a lot" of good news is already price in to current valuations.
Shares are Hold rated with a $50 price target.
RBC: User Deceleration Expected
Mark Mahaney of RBC Capital Markets commented in a note on April 24 that Twitter has a greater likelihood of reporting an upside beat as Street estimates are "reasonable."
Mahaney noted that he observed "slightly negative" comScore U.S. Multi-Platform traffic trends during the quarter as unique visitors likely grew 15 percent year over year, marking a deceleration from the fourth quarter. In addition, an AdAge Social Media survey suggested Twitter saw a "modest" deterioration in results versus prior periods with respect to advertiser budget allocation, expected future spend, and general satisfaction.
The analyst further estimated Twitter's global user base grew 18 percent year over year to 301 million monthly active users, implying 13 million quarter over quarter net adds versus 14 million in the same quarter a year ago.
Mahaney added that ad revenue grew 97 percent year over year last quarter, ahead of expectations, but the analyst is expecting only a 75 percent year over year growth in the first quarter to $395 million.
Finally, the analyst stated Twitter received $1.50 for every monthly active user in the fourth quarter, compared to $2.62 for Facebook Inc (NASDAQ: FB), however Twitter grew its monetization 65 percent year over year compared to Facebook's 35 percent.
Shares are Sector Perform rated with a $54 price target.
MKM: Stay Long Into The Results
Rob Sanderson of MKM Partners commented in a note on Monday that he is expecting Twitter to report a "beat-and-raise" quarter, but shares are likely to trade higher on improving user growth trends.
According to Sanderson, "significant" shifts are occurring in the marketing world, and Twitter is a powerful platform with a unique position. In fact, the company is closing the "large" monetization gap against Facebook, implying Twitter's market cap could "conceivably double and double again."
With that said, Sanderson argued that investors should remain long into the print as shares are still below levels seen last October and below post-IPO highs. The analyst added if he is correct on Twitter's monetization outlook, coupled with strong user growth, shares could trade at new all-time highs at some point this year.
Shares are Buy rated with a $62 price target.
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