Deutsche Bank Initiates Coverage on Twitter

Deutsche Bank analyst Ross Sandler initiated coverage on

with a Buy rating and $50 price target. Sandler noted Twitter's solid mobile coverage with 76% of traffic and 70% of ad revenues from mobile. Deutsche Bank added that product and monetization improvements will continue to add upside to post-IPO levels. The analyst commented, "[we] see four primary reasons to add to positions today: 1) MAU growth is likely to reaccelerate in one of the upcoming quarters; 2) our checks show a long list of planned monetization improvements slated for the post-IPO period (ie – now); 3) EBITDA growth is likely to top anything we've seen in the space for years; and 4) the company has “moonshot-like” catalysts in Cards & TV Amplify." Sandler analyzed risks to valuation including the possibility that Twitter won't be able to mainstream, a less proven track record, declining engagement, and decelerating MAU growth. The analyst questioned if the company can scale beyond 230m MAUs to a "mass market" phenomenon. Deutsche Bank noted that Twitter should reach the 1 billion mark at some point but emphasized the crucial MAU growth curve. Deutsche Bank's model reflects 2015 revenue estimates of $1.2 billion and growing at 30% CAGR to hit $2.1 billion in 2017. Twitter closed at $41.57 on Friday.