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Twitter (NYSE: TWTR) received a number of ratings updates from brokerages and research firms in the last week:

  • Twitter was upgraded by analysts at Bank of America from an “underperform” rating to a “neutral” rating. They now have a $36.00 price target on the stock. They wrote, “User growth (we see risks) and monetization vs. estimates (we see upside potential given low ad loads) will continue to drive investor perception of the opportunity.”
  • Twitter was upgraded by analysts at SunTrust from a “neutral” rating to a “buy” rating. They now have a $45.00 price target on the stock, down previously from $50.00. They wrote, “platforms of the internet,” meaning platforms on the size and scale of Amazon, Google, LinkedIn, etc are difficult to build. Speaking to the benefits of owning one of the platforms, Peck stated “The leverage that can be created by these unique assets can be financially powerful and provide interesting optionality over time”. Addressing the decrease in Twitter’s user growth, Peck stresses the importance of Twitter’s capability to rapidly expand revenue growth and expanding profitability by narrowing the 50% monetization gap to Facebook on a per MAU (Monthly Active User) basis. Peck estimates Twitter could “monetize revenues by 9% of the rate of Facebook”
  • Twitter had its price target lowered by analysts at Nomura from $47.00 to $43.00.
  • Twitter was upgraded by analysts at Pivotal Research from a “sell” rating to a “hold” rating. They now have a $34.00 price target on the stock. They wrote, “there are limits to the appropriate value investors should pay for a share of the company, and recent highs were most certainly too high.” The analyst noted the key reason for the upgrade is investors continue to focus on user trends. Although more users equates to the platform’s durability, validates product choices and adds to the appeal for advertisers, Pivotal Research added that there are other ways to capture market share. The analyst commented, “In other words, our view is that whether Twitter was the same size or even double its current size, its relative role in the advertising landscape (and the potential ad revenues the company would generate) would probably not be substantially different by the year of our terminal value given the manner in which advertisers tend to allocate budgets to media owners. “Consequently, if Twitter fails to meet user growth expectations there is a risk that the stock could fall off for a period of time. Other factors could also drive shares down given the degree to which investors may over-react to news on the stock (see: last month’s $3bn rise in Twitter’s value on news of the purchase of Gnip, which was likely worth under $200mm and producing only tens of millions of annual revenue). Such events could provide meaningful buying opportunities.”
  • Twitter was upgraded by analysts at Atlantic Securities from an “underweight” rating to a “neutral” rating. They now have a $35.00 price target on the stock. They wrote, “We continue to have some concerns regarding the company’s longer term growth potential, but improving engagement trends, continued strong revenue growth and a more reasonable valuation leaves the risk reward more balanced at current levels in our view.” In terms of engagement, Cordwell notes that, although his concerns have not been “fully alleviated,” Q1 has provided increasing sequential net adds, as well as flat timeline views per MAU compared to Q4. Cordwell noted a topline revenue growth of 119 percent year-over-year in Q1 which is a three-point increase from Q4. Although Cordwell and the Street expect this to “decelerate” moving forward, Cordwell acknowledged the possibility for acceleration, based on a continuing ease in comps, improving user engagement and a “significantly undermonetised” international user base. To conclude, Cordwell noted that Twitter is now trading more in line with peers on a fiscal year 2014 revenue multiple-to-growth basis after opening at a “significant premium.”
  • Twitter was upgraded by analysts at Wunderlich from a “sell” rating to a “hold” rating. They now have a $35.00 price target on the stock, down previously from $38.00. They wrote, “victim of blind investors and hype machine” which was “hijacked”

Twitter Inc (NYSE:TWTR) traded down 0.59% during mid-day trading on Monday, hitting $32.07. 15,952,792 shares of the company’s stock traded hands. Twitter Inc has a 52-week low of $29.51 and a 52-week high of $74.73. The stock’s 50-day moving average is $40.17 and its 200-day moving average is $50.44. The company’s market cap is $18.727 billion. Twitter also saw a significant increase in short interest in the month of April. As of April 30th, there was short interest totalling 50,098,350 shares, an increase of 7.2% from the April 15th total of 46,744,485 shares. Approximately 19.5% of the company’s shares are sold short. Based on an average daily volume of 15,312,281 shares, the short-interest ratio is currently 3.3 days.

Twitter, Inc (NYSE:TWTR), is a global platform for public self-expression and conversation in real time.

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