Twitter (TWTR): Good Results, Weak Guidance - BMO
BMO analyst, Daniel Salmon, maintained his Market Perform rating but cut his PT on Twitter (NYSE: TWTR) nearly in half to $18 from $32 as better than expected results were offset by weak guidance.
4Q15 revenue of $710.5 million beat the Street’s $710.3 million. Non-GAAP EPS of $0.16 also beat the Street’s $0.12. Total monthly active users (MAUs) excluding SMS fast followers were 306 million, below our and the Street’s 309 million. 1Q16 revenue guidance calls for $595-610 million, below consensus of $633 million; 2016 guidance calls for an adjusted EBITDA margin of 25-27%.
Light 4Q MAUs and slightly better-than-expected revenue were largely in line with expectations, as was 1Q16 and early-2016 guidance.
Twitter is realigning under a new CEO (and an increasingly new board), and it appears that initiatives to improve the user experience, make it less confusing, and fix “broken windows” (as the company put it) will finally get under way.
A well regarded CMO (Leslie Berland from AXP) should help improve marketing efforts, and the global rollout of the self-serve ad platform is complete, which helped add 30K new advertisers (to 130K total), driven more by SMB marketers. Twitter is also now generating minimal FCF (Cash from Opex less Capex) and expects it to continue to ramp.
Reducing target to $18 from $32 based on lower estimates and sector wide multiple compression. Our new $18 target implies a 13.3x 2016E adjusted 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 $14.98 yesterday.