Put Aside The Rumors And Take A Look At Twitter's Fundamentals

Checks indicate that Twitter Inc TWTR could report its Q3 revenue at the high-end of the range, with slightly up MAUs, while its Q4 guidance may meet or exceed consensus expectations for the first time in a year, Deutsche Bank’s Ross Sandler said in a report. He maintains a Buy rating on the company, with a price target of $22.

“Amidst intense volatility around whether TWTR is acquired or not, we shift back to what we can track, ie — the fundamentals,” analyst Sandler commented.

Q3 Preview

Checks indicate broadly in-line results from Twitter. MAU may be up by low single digits, marginally higher than the DB estimate of 314 million. “Engagement continues to improve from small tweaks to the core timeline, but not broadly noticeable in reported metrics,” Sandler wrote.

Related Link: Salesforce Investors Appear To Be Very Happy With Latest Twitter News

Twitter has experienced significant success with the NFL experiment, with Amplify ad commitments substantially higher than the initial expectations and higher than the licensing costs by several times. Moreover, audience in the first couple games was also higher than what Twitter had expected.

“The DR revenue initiative continues to come together across desktop and mobile (Android), and should help modestly in 2016, with some advertisers going ‘uncapped’ in 2017,” the analyst mentioned. He added that TellApart also seems to have gained traction with its new CPA offering for retail into Q4, which should boost network ad revenue.

Sandler believes Twitter will report its revenue at or above the DB estimate of $602 million, and the consensus revenue expectation for Q4 of $754 million may prove conservative. “We think this is the first print in a year where TWTR can see estimates flat to up.”

At last check, Twitter was up 1.71 percent at $17.86.

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