SunTrust Maintains Rating on Twitter, Reduces Price Target

In a note released Wednesday, SunTrust analyst Robert Peck maintained his Neutral rating on Twitter, Inc. TWTR but lowered the price target from $55 to $50. Peck explained that monetization is strong and that the real question is user growth. Not only did Twitter finish the quarter strong and within guidance, but the company was also able to increase the revenue per TimeLine view growth rate from 73 percent to 78 percent in the U.S. and from 140 percent to 154 percent international. Despite this positive performance, Peck was sure to note that the growth rate for monthly active users (MAUs) declined from 30 percent to 25 percent, and TimeLine views per MAU dropped 3 percent year-over-year. Looking forward Peck made note of the 180 day expiration of the IPO lockup that will take place on May 6th. The expiration of this lockup will free up approximately 480 million shares for sale. According to Peck, the company will not be offering a secondary offering. Peck provided a list of "other key items" which include:
  • Mobile usage expanded to 80 percent of revenues compared to 60 percent last year.
  • Ad engagements were up 28 percent quarter-over-quarter while average cost per engagement dropped 20 percent
  • EBITDA margin was 15 percent ahead of estimates
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