Market Overview

What Twitter Experts Think Of Dick Costolo's Resignation


Twitter Inc (NYSE: TWTR) was last week's hottest stock after former CEO  Dick Costolo announced his resignation on Thursday afternoon. Below is a look at what some of Wall Street's top analysts have since said about the company's future post-Costolo.

Maintain Market Outperform Rating, $48 Price Target

Ronald Josey, of JMP Securities, rated Twitter at Market Outperform alongside a $48 price target.

Josey notes, “While we were somewhat surprised to see CEO Costolo step down this soon given recent product launches and a faster product release cycle, we also believe this action could accelerate Twitter’s overall transformation.”

Jack Dorsey, chairman and co-founder, will step in as interim CEO until there is a replacement. Dorsey will still maintain his role as CEO of Square at the same time.

The Return Of Jack

Bob Peck, analyst at SunTrust Robinson Humphrey, rated the social media company at Neutral along with a targeted price of $40, lowered from prior target of $44.

Peck had predicted the resignation back in December and suggested possible candidates to replace Costolo: Ross Levinsohn (former CEO of Yahoo!), Adam Bain (Twitter’s president of global revenues and partnerships), Mike McCue (Flipboard CEO), Evan Williams (previous chairman and CEO), and Kevin Systrom (Instagram founder).

Related Link: Bob Peck's Take On Why Dick Costolo Stepped Down

Peck noted that “Twitter has stated it has a fiduciary duty to evaluate all options that maximize shareholder value.” He adds that a merger/acquisition deal is not likely in the short term, though investors are pointing to Google Inc (NASDAQ: GOOG) and Apple Inc. (NASDAQ: AAPL) as the most interesting partners.

Peck concludes that Twitter is still a unique platform that has a tremendous total available market.

It Was Time To Part Ways

Sarah Hindlian of Brean Capital rated Twitter on Friday, giving the company a Buy rating alongside a price target of $55.

She noted, “We believe that a replacement CEO may be able to better define Twitter as an event-driven platform, attract larger branded advertisers, and respond more rapidly to changes in the marketplace.”

She specified that Costolo has taken blame for Twitter’s slow response to creating a stronger advertising platform along with posting unstable financials, while forecasting revenues of $470-$485 million for the second quarter.

Another CEO Transition

Brian Nowak, analyst at Morgan Stanley, has maintained his rating of Equal Weight. Nowak noted that the stock's positive increase of ~3.5 percent after the resignation news broke indicates investors are on board.

"The company needs to seek a product specialist laser-focused on emphasizing and building Twitter’s core use case (be it personalized real-time news and information, coincident TV viewing, having live, global conversations, among other possibilities)," he added.

Even without Costolo, Nowak concluded, there is still uncertainty surrounding user growth, engagement and advertisers.

Commitment To Maximizing Shareholder Value

Doug Anmuth, analyst at JP Morgan, rated Twitter at Market Overweight.

He believes “the transition will be positive over time as it could lead to bigger product changed on the platform. Twitter indicated that it is fully committed to maximizing shareholder value and believes it can do that as an independent company.”

He adds that Twitter is still a very unique and differentiated platform, and that user experience can improve along with driving monthly-active-users MAU) higher.

Twitter has been struggling in the past three months, down nearly 23 percent, but is up 1 percent year-to-date.

Latest Ratings for TWTR

Feb 2019BTIG ResearchMaintainsBuyBuy
Jan 2019Bank of AmericaUpgradesUnderperformBuy
Dec 2018GuggenheimInitiates Coverage OnBuy

View More Analyst Ratings for TWTR
View the Latest Analyst Ratings

Posted-In: Brean Capital Brian Nowak Dick Costolo Doug AnmuthAnalyst Color Top Stories Analyst Ratings Tech


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