Evercore ISI Sees More Risk Than Reward in Twitter (TWTR); Analyst Cuts Rating o 'Sell'
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(Updated - August 18, 2016 6:24 AM EDT)
Evercore ISI downgraded Twitter, Inc. (NYSE: TWTR) from Hold to Sell with a price target of $17 (from $18). Analyst Ken Sena said usage growth and engagement was still a challenge, and he sees more risk than reward.
"A real-time data source such as TWTR strapped to a large data and infrastructure stack could be very exciting, which we surmise as underlying some of the stock’s recent move. However, as broadcasting capabilities permeate competing social platforms that are winning influence with TWTR users and advertisers, which recent traffic patterns and management commentary citing its ad pricing premium confirm, we see more risk than reward, particularly ahead of Snapchat’s anticipated monetization ramp this fall," said Sena.
The analyst added, "Moreover, where execution is concerned, the company’s 3Q revenue forecast implies just 5% growth at the midpoint, roughly 1/10th FB's recent rate, on roughly 1/10th FB’s revenue scale. Also, when adjusted for growth and / or Stock comp, we believe TWTR to be currently trading at or above what MSFT paid for LNKD in June, despite its revenues being its revenues being much less recurring."
Shares of Twitter, Inc. closed at $20.17 yesterday.
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