Expert Explains Yesterday's Twitter Downgrades, Talks Target Price

Twitter

got two downgrades yesterday, and Robert Peck, managing director and Internet analyst at SunTrust

Robinson Humphrey, appeared on CNBC's Squawk on the Street to talk out the downgrades as well as their

price on Twitter. “The stock is more than doubled since the IPO and in the last two weeks it's run over 40 percent on really no new significant news that wasn't already expected by the market,” said Peck. “When you look at what that implies as far as the multiples, it's about 36 times revenues and we historically went back and looked at other high-fliers and saw how high they got as their multiples, and the highest we ever saw was about 28 or so for LinkedIn

. Salesforce

for comparison was around 15 or so. So we just think the evaluations run a little more here in the near-term.”

:

SunTrust Robinson Humphrey's price target on Twitter is $50 for the end of 2014, Peck said. “If you look at the estimates the brokers put out when they IPO'd, you had almost a doubling of those initial estimates—became the actuals. So we do that analysis on Twitter, and if we double the estimates right now you get to about $5 billion of revenues in 2017,” said Peck. “To justify the current targets to pay a 10 times multiple on [2017] you need to be around $6 billion. So it's still a stretch as far as some expectations.”