SunTrust's Peck Weighed in on Twitter (TWTR) Following Costolo Resignation

SunTrust Robinson Humphrey analyst Robert Peck weighed in on Twitter, Inc. (NYSE: TWTR) amid news CEO Dick Costolo is stepping down. The firm reiterated a Neutral and trimmed its price target to$40.00 (from $44.00).

Peck believes the board will look for internal and external candidates that have either run large media organizations or have deep product experience. Candidates that make senses including: Ross Levinsohn (former Yahoo! CEO), Adam Bain (Twitter President of Global Revenues & Partnerships), Mike McCue (former board member and Flipboard CEO), Evan Williams (co-founder and Medium CEO), or Kevin Systrom (Instagram Founder). Further, Peck said while they have great respect for executives like Anthony Noto or Marissa Mayer, they do not think they are likely to become the next CEO.

While the company reaffirmed 2Q revenue and EBITDA guidance they commented that the weak MAU trends for April and May continued into June. Given recent missteps they view the potential in-line financials as a mild positive.

On M&A, Peck doesn't think a deal is likely short term, as that would have been an attractive alternative to the CEO transition. Investors point to Google (GOOGL, Buy) and Apple most as interesting partners.

"We continue to be big believers in the opportunity in front of Twitter as it is a unique platform with a tremendous TAM," Peck commented. "The company's long-term success will be predicated on: 1) accelerating product innovation; 2) tapping into its massive logged-out reach; 3) reinvigorating the ~700m registered users that have churned; 4) increasing engagement of its users; and 5) optimizing advertiser offerings and targetability. However, in the short-term, the company is still facing user growth and engagement challenges that will need to be corrected to put the company on the path for long-term success. We maintain our Neutral rating and reduce our target to $40 from $44, representing 8x 2016 EV/Revs and 32x EV/EBITDA."

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 $35.84 yesterday.

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