Twitter (TWTR) Risk Skewed to the Downside Amid Rumor-Fueled Surge - SunTrust's Peck
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SunTrust Robinson Humphrey analyst Robert Peck weighed in on Twitter, Inc. (NYSE: TWTR) amid various reports the company has received takeover interest from several parties and may explore a sale. The analyst says with the recent rally he sees unequal risk/reward skewed to the downside. The firm maintained a Neutral rating and price target of $18 on TWTR.
Commenting on potential takeover price, Peck commented: "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. 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 the company clarify that it is not for sale, the shares could trade back down to the ~$18 level, from before the press announcements, or down ~22%."
Shares of Twitter, Inc. closed at $22.62 yesterday.
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Related EntitiesSunTrust Robinson Humphrey, Twitter, IPO, Robert Peck
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