Market Overview

Deal Or No Deal: Bob Peck Breaks Down What A Premium For Twitter Would Look Like Now

Share:
Deal Or No Deal: Bob Peck Breaks Down What A Premium For Twitter Would Look Like Now

Salesforce (NYSE: CRM), Alphabet Inc (NASDAQ: GOOG), Walt Disney Co (NYSE: DIS) and Microsoft Corporation (NASDAQ: MSFT) are the latest names to be tossed around in Twitter Inc (NYSE: TWTR) takeover speculation. It's been enough to drive the stock up more than 25 percent over the last two trading sessions.

SunTrust analyst Bob Peck weighed on the reports and what it means for the stock. In a note released Monday afternoon, the analyst said Twitter's valuation has decoupled from fundamentals and believes these takeover reports have created unequal risk-reward.

Related Link: Here Is Every Twitter Takeover Rumor Of 2016

"Typically when a potential deal is actively discussed in mainstream media prior to announcement (pushing the price higher), the premium paid is stated vs. a prior period closing price moving average," said Peck. "For Twitter, we looked at the 30, 60 and 90 day averages and used 40% as a takeout premium. That level of premium would drive prices of $27, $26, and $24 - close to the original $26 IPO price and only up 3% to 15% from today’s price. Further, $26 share price would represent ~$20B transaction value, 22x EV/EBITDA (ignoring excess SBC) and 6.1x EV/Sales on 2017 street estimates – a slight premium to LinkedIn’s takeout multiples."

However, should Twitter clarify it's not for sale, shares could trade back down to the $18 level.

Peck maintain the firm's Neutral rating and $18 price target. The stock closed Monday at $23.37, up 3.2 percent on the day.

Latest Ratings for TWTR

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

View More Analyst Ratings for TWTR
View the Latest Analyst Ratings

Posted-In: Bob Peck SunTrust Robinson HumphreyAnalyst Color M&A News Analyst Ratings Tech Best of Benzinga

 

Related Articles (CRM + DIS)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
TOLGoldman SachsInitiates Coverage On42.0
KBHGoldman SachsInitiates Coverage On36.0
YEXTSunTrust Robinson HumphreyMaintains28.0
LHCGSunTrust Robinson HumphreyMaintains160.0
DLRSunTrust Robinson HumphreyMaintains140.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Jim Strugger's Cemex Trade

Monday Market Wrap: Stocks Fall Nearly 1% To Start Week