Bob Peck: Twitter 'MAUs Could Decline' Over Short-Term

In a report published Friday, SunTrust Robinson Humphrey analyst Robert S. Peck maintained a Neutral rating on Twitter, Inc. TWTR, while raising the price target from $40 to $44. Dick Costolo is to step down from his role as CEO, although he will remain on the company's board. Jack Dorsey, co-founder of Twitter, will be the Interim CEO, till a permanent replacement is found. "We think the board will look for internal and external candidates that have either run large media organizations or have deep product experience," Peck said, while adding, "While we have great respect for executives like Anthony Noto or Marissa Mayer, we do not think they are likely to become the next CEO." The company has reiterated its revenue and EBITDA guidance for 2Q, while mentioning that it expected the weakness in MAU, witnessed in April and May, to continue in June as well. While the potentially in-line results are a "mild positive" for the stock, the MAU expectations could be a key concern. While the company said it was committed to evaluating all option to ensure maximum shareholder value, the analyst does not expect any M&A deal in the short term, given that such a deal would have been a better option that CEO transition. "We continue to be big believers in the opportunity in front of Twitter as it is a unique platform with a tremendous TAM," Peck stated, while mentioning that the company's long-term success would depend on acceleration in product innovation, ability to tap into the large logged-out reach, increasing user engagement, attracting back the close to 700 million registered users who have churned and optimizing advertiser targeting and offerings. "However, in the short-term, the company is still facing user growth and engagement challenges that will need to be corrected to put the company on the path for long-term success," the SunTrust report said.