BofA/Merrill Lynch Downgrades Twitter, Inc. (TWTR) to Neutral

BofA/Merrill Lynch downgraded Twitter, Inc. (NYSE: TWTR) from Buy to Neutral with a price target of $50.00 (from $60.00) following solid Q3 results but expectations were likely higher. They said Q4 guidance will be the controversy for the stock with ad growth down from 109% in Q3 to 80-85% in Q4. In addition, the guidance implies 0-10mn 4Q MAUs adds.

Justin Post commented, "Our thesis on the stock was based on: 1) revenue upside from new ad formats, 2) improving MAU trends from product changes, and 3) opportunity to convert or monetize non-logged in users. Call commentary suggest that these opportunities still exist (11/12 analyst day will highlight opportunities), but 4Q guidance suggests the ramp will not be consistent and or as fast as we expected to drive stock higher near-term, and we have less confidence in the long-term MAU ramp."

The firm cut FY 2015 EPS from $0.30 to $0.28 and FY 2016 EPS from $0.71 to $0.62.

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 $48.56 yesterday.

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