Peck: Twitter's New Ad Strategy Could Boost EBITDA By 6%

• In a report issued Thursday, SunTrust Robinson Humphrey’s Bob Peck took a look into Twitter Inc TWTR new ad strategy.
• The firm estimates the new approach could drive revenue up by 2 percent and EBITDA up by 6 percent.
• Peck reiterated a Buy rating on the stock.

Twitter announced logged-off ads will begin showing up on desktop in the US, UK, Japan and Australia. The initial focus will be placed on campaigns aimed at driving website clicks, conversion and video views.

In a report issued Thursday, SunTrust's Bob Peck weighed in on the issue. His read is that "this logged-off user and initial focus skews toward brand advertisers which is Twitter's sweet spot."

Furthermore, management said in the past that they anticipate these ads to monetize at roughly half the rate of normal promoted ads.

Related Link: Twitter Launching Ads For Logged Out Users; Stock Spikes

The analyst explained that, while not at all unexpected, the initiative shows continued execution by the company's team and the increasing reach of the platform.

Peck's team believes the surge in revenues near-term "will be immaterial but strategically important as we look to 2016 and beyond."

The experts estimate the monetization of logged-off users could provide a 2 percent lift to revenues and a 6 percent boost to EBITDA in 2016. Moreover, the longer-term increase from the augmented reach of the platform, "which has been a sticking point for investors and advertisers, could be significantly larger - particularly as we think about the 1.3B audience that sees Tweets on syndicated sites."

In fact, "concerns over the ability to target and monetize these users are misplaced given Twitter's rich contextual information, as well as integration with Google and other data providers."

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.