Twitter (TWTR): Significant Layoff Possibly Coming With Earnings Call - Suntrust

October 25, 2016 7:30 AM EDT
Get Alerts TWTR Hot Sheet
Price: $16.58 -1.25%

Rating Summary:
    7 Buy, 36 Hold, 11 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 30 | Down: 30 | New: 23
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SunTrust Robinson Humphrey analyst, Bob Peck, reiterated his Hold rating on Twitter, Inc. (NYSE: TWTR) noting that there are several items Twitter may focus on during Thursday's 3Q report: right-size the cost structure given the slower growth; elaborate on incremental growth strategies; and clarify management's full-time commitment. Last night, Bloomberg reported the company may cut 8% of the workforce or ~300 people. We estimate this level of cuts could lift EBITDA (or investments) by ~$50-$100M and put the cost structure more in-line with its growth trajectory.

Results for 3Q are widely expected to be weak and 4Q results are critical in demonstrating any potential efficacy of the current strategy (many initiatives culminate in 4Q - NFL etc.). The analyst went on to state: "if current trends continue, we think M&A is inevitable, albeit potentially at lower prices and not until 2017".

No change to the price target of $18.

For an analyst ratings summary and ratings history on Twitter, Inc. click here. For more ratings news on Twitter, Inc. click here.

Shares of Twitter, Inc. closed at $18.03 yesterday.

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