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Standpoint's Moas Downgrades Twitter Despite Takeover Speculation

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Standpoint's Moas Downgrades Twitter Despite Takeover Speculation

Ronnie Moas of Standpoint Research has downgraded Twitter Inc (NYSE: TWTR) to Reduce from Buy despite takeover speculation swirling around the stock.

The stock is up 28 percent since Moas' recommendation in January and up more than 50 percent since the second-quarter low.

"It is not easy in this type of environment to get a 28 percent gain and 1200 basis points gain versus the S&P in this environment and I don't want to risk having it taken away," Moas wrote in a note.

According to the analyst, the stock will go to high-20s in the event of a deal. If there is no deal, it could fall back and retest the mid -eens low that it touched in the second quarter.

Related Link: Cowen & Co.'s Social Media Analyst Talks About Twitter's "Well Publicized" Woes

"[S]o there is nothing really to get excited about here with a 30 percent upside at the 30 percent downside. I prefer to take this money put it into another name that has 30 percent upside without the downside risk," Moas continued.

The market is speculating Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL)'s Google, Oracle Corporation (NYSE: ORCL), International Business Machines Corp. (NYSE: IBM) and salesforce.com, inc. (NYSE: CRM) as potential acquirers. Moas noted, "It looks like a crap-shoot to me right now at $22."

Moas continued that Twitter is now trading at a high multiple despite excluding the large cash position on its balance sheet.

"There is a small chance that a bidding war could take place and drive Twitter above $30 but I don't think that that is a likely outcome. The market has already priced in the risk-reward on a deal happening or not happening," Moas added.

At time of writing, shares of Twitter fell 3.14 percent to $21.93. However, by time of publication, the stock was up 0.31 percent at $22.69.

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Latest Ratings for TWTR

DateFirmActionFromTo
Nov 2019MaintainsMarket Perform
Nov 2019DowngradesIn-LineUnderperform
Oct 2019MaintainsHold

View More Analyst Ratings for TWTR
View the Latest Analyst Ratings

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