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Morgan Stanley Not Encouraged By Twitter's Growth, Lowers Target To $16

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Morgan Stanley Not Encouraged By Twitter's Growth, Lowers Target To $16
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User and engagement trends for Twitter Inc (NYSE: TWTR) reveal continued declines for the social media platform.

Morgan Stanley’s Brian Nowak maintains an Underweight rating on the company, while lowering the price target from $18 to $16.

Downward Trends

Nowak mentioned that Twitter’s core user engagement trends continue to decline, given that time spent per mobile user in the United States dropped an estimated 10 percent year-on-year in 1Q16.

Although this was better than the over 30 percent year-on-year decline witnessed in 2015, Nowak pointed out that Twitter’s “time spent per user is already among the lowest in the social group.”

In addition, there appears to be no signs of a rebound in new user growth, with new mobile app downloads remaining flat quarter on quarter for the second successive quarter.

Related Link: What The Twitter-NFL Partnership Means For Twitter

“Getting a precise read into quarterly monthly active user (MAU) trends is difficult, but these data make us incrementally cautious considering 1Q is typically a strong seasonal MAU quarter for TWTR,” the analyst stated.

Estimates Reduced

Based on these trends, the MAU estimates for 2016 and 2017 have been reduced from 5.2 million to 2.6 million and from 3.4 million to 0.3 million global monthly users, respectively.

Nowak expects most of the 2016 net additions to come in the second half of the year, benefiting from the NFL deal, Rio Summer Olympics and the U.S. Presidential election.

The 2016 and 2017 advertising revenue, user, impression, total revenue and EBITDA estimates have also been lowered.

Latest Ratings for TWTR

DateFirmActionFromTo
Nov 2016OTR GlobalDowngradesMixedNegative
Oct 2016OppenheimerUpgradesUnderperformPerform
Oct 2016Goldman SachsMaintainsBuy

View More Analyst Ratings for TWTR
View the Latest Analyst Ratings

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