UPDATE: Wedbush Initiates Coverage on Twitter with Neutral Rating, $37 PT as Premium Valuation Reflects Investor Confidence in Revenue Growth

In a report published Friday, Wedbush analyst Michael Pachter initiated coverage on Twitter (NYSE: TWTR) with a Neutral rating and $37.00 price target.In the report, Wedbush noted, “We are initiating coverage of Twitter with a NEUTRAL rating and a 12-month price target of $37. We arrive at our $37 PT by assuming that Twitter doubles its MAUs from the current 230 million to 460 million over the next five years, and by further assuming that its current rate of 7 timeline views per day grows to 10 timeline views per day due to more Verified Accounts. This results in a cumulative annual timeline view total of 1.7 trillion views. We believe Twitter has the potential to generate as much as a penny per timeline view; however, we have assumed a far more conservative $0.005 per timeline view, resulting in $8.4 billion in annual revenue. With gross margin of 65- 70% and opex of $2 billion annually, we believe Twitter has the potential to deliver $3.5 billion in EBITDA by 2018. We apply a conservative EBITDA multiple of 15x, discounted back at 15%. This leads us to a present value of $25.8 billion, or a value of $37 per share.”Twitter closed on Thursday at $44.90.