SunTrust's Bob Peck Says Focus For Twitter Is On Execution, Remains 'Cautiously Optimistic'

Shares of Twitter were trading below the $14 mark for the first time ever ahead of Thursday's market open as the company's fourth quarter results chased away many of the bulls. However, Bob Peck of SunTrust Robinson isn't throwing in the towel just yet as he maintained a Buy rating on Twitter's stock with a price target lowered to $20 from a previous $26. According to Peck, Twitter's management presented a "cogent vision" for the company which makes him "cautiously optimistic" and should "give investors hope" moving forward. Peck pointed out that Twitter's daily active user (DAU) base was flat in the quarter - indicating that "core users remain intact." In addition, time spent per user has risen while searches are up double-digits year-over-year. Peck added that while Twitter's management has a game plan moving forward, the company has 3 scenarios it can tap on to "provide investor support." First, the company can initiate cost cutting plans to better align itself with a reduced growth trajectory, second, average revenue per user growth alone can support near term expectations, and finally, M&A "math" supports higher valuations. Bottom line, Twitter has several catalysts ahead (Periscope, monetizing logged-out audiences, enhancing targeting, Google integration, etc) to justify a "cautiously optimistic stance." As such, the performance of Twitter's stock and the company should now be judged by the company's execution on its initiatives.