(Updated - June 16, 2015 11:18 AM EDT)

MKM Partners downgraded Twitter, Inc. (NYSE: TWTR) from Buy to Neutral with a price target of $39.00 (from $57.00). Analyst Rob Sanderson doesn't think user growth issues will improve near term, and he said its CEO search introduces uncertainty.

"We still believe in the long-term potential for and see significant upside if the company executes on user experience improvements. However, we see no catalyst for improving sentiment in the next two quarters (besides a possible GOOG bid)," said Sanderson.

"Core users are heavy consumers, but attrition of new users is very high and growth in the user base is stalling out. We believe TWTR has a strong content story, but identifying and surfacing relevant content for new and casual users is difficult. This is the fundamental issue, in our view," continued the analyst. "We interpret the company’s work on logged-out experience (content curation) as an effort to solve this problem."

"CEO search introduces uncertainty and likely some delay, unless Dorsey takes over full-time While the Street (and media) have been calling for Costolo’s head for some time, we believe his decision to leave is not an endorsement that TWTR’s challenges are easing," Sanderson added. "There is the possibility that Dorsey may be interested in the CEO role on more than an interim basis. A returning founder, now more seasoned, could be positive for the company. Relinquishing the CEO position at Square would be required. There is renewed media speculation that Square is shopping itself and/or preparing to file for IPO (which would require a full-time CEO). "

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 $34.67 yesterday.