Morgan Stanley analyst Brian Nowak has lowered the firm’s 2016 EBITDA estimates for Twitter Inc TWTR and Yahoo! Inc. YHOO based on the latest market share and user engagement trends.
“Weak user and engagement trends drive our (UW) TWTR numbers and PT lower and we reduce (OW) YHOO paid search too,” Nowak explained in a new report.
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According to the report, Twitter engagement/user amount is still falling 20 percent year-over-year (Y/Y), and app download data confirms deterioration in user growth. Morgan Stanley is now 26 percent below consensus 2016 EBITDA estimates for Twitter. In addition to the Underweight rating, the firm now has a $18 price target for the stock.
In addition, negative search data has led Morgan Stanley to reduce its Y/Y Yahoo search growth estimates from 5.0 percent to 2.0 percent. Nowak noted consumer transition to mobile is also costing Yahoo market share. Morgan Stanley maintains an Overweight rating on Yahoo and a $49 price target for the stock.
Disclosure: The author holds no position in the stocks mentioned.
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