Twitter Will Reverse Last Year's MAU Decline, Says Deutsche Bank

Twitter Inc TWTR remains on track in 1Q with stable MAUs and improving engagement. Deutsche Bank’s Ross Sandler maintained a Buy rating for the company, with a price target of $25. The analyst expects Twitter to report 1Q revenues in-line with estimates.

Twitter is unlikely to beat 1Q revenue expectations, since checks are mixed, analyst Ross Sandler said. He also expects guidance to be broadly in-line with the 2Q estimate of $650m.

Big Positive In 1Q

Twitter’s MAUs are likely to have been stable in 1Q, reversing the decline witnessed in the previous quarter. Sandler added that there were signs of “improving engagement from the algorithmic timeline, favorites button and other product tweaks.”

The analyst believes O&O ad revenue could reaccelerate in the back half of the year, “when all the DR plumbing is in place.” Hence, shares are likely to remain range-bound in the near term, although there is upside in 2H16.

MAU Trends

Twitter is estimated to have added +2m net MAU in 1Q. (back to 307m). Referring to the prospects for 2016 and beyond, Sandler commented that there could be “further emphasis around video, real-time and the algorithmic timeline, and deeper integration with Periscope.” He added that these efforts are likely to boost engagement, although are unlikely to result in “massive MAU growth.”