Market Overview

BMO Drastically Slashes Twitter Targets, But Still Sees 20% Upside

Share:
Related TWTR
Watch These 8 Huge Call Purchases In Friday Trade
'Alien' Fans Troll Trump Anti-Immigrant Hotline Ahead Of Prequel Opening
Stocks Open Flat; Earnings Reports Trigger Early Breakouts (Investor's Business Daily)
  • Shares of Twitter Inc (NYSE: TWTR) have plummeted 69 percent in the last year and are trading near their 52-week low of $14.31.
  • BMO Capital Markets’ Daniel Salmon maintained a Market Perform rating on the company, while reducing the price target from $32 to $18.
  • Salmon recommends remaining on sidelines until Twitter’s new initiatives start yielding results, although the stock the potential for 20 percent upside.

Twitter reported robust Q4 results with both revenues and Non-GAAP EPS ahead of expectations, at $710.5 million and $0.16, respectively. The company’s total monthly active users or MAUs, excluding SMS fast followers, at 306 million, however, fell short of expectations.

Related Link: For Twitter, There's Still A Lot Of Work Ahead

The company has guided to 1Q16 revenues and EBITDA margin of $595-610 million and 25-27 percent, respectively.

Analyst Daniel Salmon believes that as Twitter realigns under a new CEO, its initiatives to improve user-experience make its platform less confusing and fix “broken windows,” will finally be implemented.

The analyst expects the company’s new CMO to boost marketing efforts and complete the global roll out of Twitter’s new self-serve ad platform.

“Twitter is also now generating minimal FCF (Cash from Opex less Capex) and expects it to continue to ramp,” the BMO Capital Markets report mentioned.

Although Twitter’s user base and its growth remains a key challenge, significant opportunities to attract direct response advertising dollars through ad formats exist, Salmon stated.

The analyst recommends remaining on the sidelines until the company’s “new initiatives like Moments and the increased marketing push bear fruit, as well as the continued impact of the search partnership with Google.”

The annual EPS estimate for 2016 has been raised from $0.46 to $0.56, while that for 2017 has been reduced from $1.08 to $0.95.

Latest Ratings for TWTR

DateFirmActionFromTo
Mar 2017BarclaysInitiates Coverage OnUnderweight
Feb 2017CitigroupDowngradesNeutralSell
Feb 2017Loop CapitalDowngradesHoldSell

View More Analyst Ratings for TWTR
View the Latest Analyst Ratings

Posted-In: BMO Capital Markets Daniel SalmonAnalyst Color Long Ideas Price Target Analyst Ratings Tech Trading Ideas

 

Related Articles (TWTR)

View Comments and Join the Discussion!