Jefferies on Twitter, Inc. (TWTR): 'Expect "No" on Musk's $54.20 Offer'

Jefferies analyst Brent Thill reiterated a Hold rating and $48.00 price target on Twitter, Inc. (NYSE: TWTR).

The analyst comments "There is downside risk to the stock if TWTR rejects the $54.20 offer. In his brief letter, Musk highlighted that his offer is final and there will be no "back-and-forth game". Musk does not believe that he can influence the company as a public investor, and may potentially sell his position if the offer is not accepted. While another offer is possible should TWTR reject the bid, the lack of Musk's involvement could limit upside potential over the next 12 months.
Believe a bid of $60+ is needed for a takeout. We note that a $60 bid would imply just 23x FY23 EBITDA, which is still well below where the stock traded in early 2021 (low 30x EBITDA). We believe that TWTR has a strong technology leadership with Chairman of the Board Brett Taylor having served as CTO of Facebook ('09-12) and Co-CEO of Salesforce. We also view Board member Egon Durban from Silver Lake as an impressive financial backer who could positively influence the company over time. Regulatory pressures could make it difficult for another big tech player to make an offer. If TWTR rejects Musk's offer we see the possibility for another investor to support the stock should it sell off. We believe that, if there is a 20%+ sell off on a rejected bid, TWTR would definitely present value to a strategic investor. In our view, this could be a positive outcome given TWTR would likely prefer a consortium of investors rather than be controlled by a single large owner."

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 $45.85 yesterday.

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