Twitter Inc. (NYSE:TWTR) was downgraded by equities research analysts at Loop Capital from a “hold” rating to a “sell” rating in a report released on Wednesday. They currently have a $18.00 price target on the social networking company’s stock. Loop Capital’s target price suggests a potential downside of 24.11% from the company’s current price.
The analysts wrote, “We believe the company may eventually get a takeover bid but that a meaningful premium from its current price is unlikely, which leaves more downside risk if a deal falls through,” analyst Blake Harper wrote in a note.Twitter’s board is reportedly seeking a valuation of $30 billion, or about $43 per share, which in Harper’s view would stretch the balance sheets of most (but not all) suitors.Related Link: Skeptical Of M&A Rumors, Mizuho Downgrades TwitterIn addition, a buyout of Twitter is challenging given the potential acquirer needs to invest substantially to fix the following issues:”Product upgrades are needed to make it easier for wider audience use.””User growth is stagnant in the U.S.””Advertising technology upgrades are needed amid an increasingly competitive environment.””Safety and abuse issues persist.””Further potential dilution from employee stock based compensation.””A ballooning price tag and valuation that makes an ROI difficult to achieve.”Despite facing user growth headwinds, Twitter’s live streaming is the best tool to monetize a larger audience and show its potential to suitors. That said, the analyst is skeptical whether the live streaming has made a significant impact in the third quarter.”We do not believe the live streaming events changed MAU trends in Q3, with only two NFL events in the quarter, and an uncertain link between viewership and logged in usage,” Harper continued.Shares of Twitter closed Tuesday’s trading at $23.72, which implies 18.3x EV/EBITDA and 44.3x P/E on 2017 estimates growing 16 percent and 9 percent.”We view the stock as having a sizable takeover premium priced in given Internet peers are trading at 15.4x and29.4x, respectively, and LinkedIn is being acquired at 18.1x and 42.0x on its 2017 estimates,”
Several other equities research analysts have also commented on the company. Canaccord Genuity reissued a “buy” rating on shares of Twitter in a research note on Sunday. Vetr raised Twitter from a “buy” rating to a “strong-buy” rating and set a $22.10 target price on the stock in a research note on Monday, September 5th. Jefferies Group reaffirmed a “buy” rating and issued a $23.00 target price on shares of Twitter in a research note on Monday, August 22nd. Evercore ISI lowered Twitter from a “hold” rating to a “sell” rating and reduced their target price for the company from $18.00 to $17.00 in a research note on Thursday, August 18th. Finally, Zacks Investment Research lowered Twitter from a “hold” rating to a “sell” rating in a research note on Wednesday, July 20th. Thirteen research analysts have rated the stock with a sell rating, twenty-six have assigned a hold rating, seven have assigned a buy rating and one has assigned a strong buy rating to the company’s stock. The company presently has a consensus rating of “Hold” and an average price target of $19.61.
Shares of Twitter (NYSE:TWTR) traded down 1.0527% during trading on Wednesday, hitting $23.4703. The company’s stock had a trading volume of 5,061,809 shares. Twitter has a one year low of $13.73 and a one year high of $31.87. The company has a 50-day moving average price of $19.29 and a 200-day moving average price of $17.02. The stock’s market cap is $16.43 billion.
Twitter (NYSE:TWTR) last announced its quarterly earnings results on Tuesday, July 26th. The social networking company reported $0.13 EPS for the quarter, topping the Thomson Reuters’ consensus estimate of $0.10 by $0.03. The business had revenue of $602 million for the quarter, compared to analyst estimates of $606.37 million. Twitter had a negative return on equity of 6.01% and a negative net margin of 16.51%. The company’s quarterly revenue was up 19.9% on a year-over-year basis. During the same quarter in the previous year, the company earned $0.07 EPS. Equities analysts predict that Twitter will post $0.51 EPS for the current fiscal year.
In other news, insider Robert Kaiden sold 3,604 shares of the firm’s stock in a transaction on Wednesday, September 7th. The shares were sold at an average price of $20.06, for a total transaction of $72,296.24. The transaction was disclosed in a filing with the SEC, which is accessible through this link. Also, insider Adam Messinger sold 52,914 shares of the firm’s stock in a transaction on Monday, August 1st. The shares were sold at an average price of $16.76, for a total transaction of $886,838.64. The disclosure for this sale can be found here. Insiders own 10.79% of the company’s stock.
Hedge funds and other institutional investors have recently added to or reduced their stakes in the stock. Vanguard Group Inc. increased its position in shares of Twitter by 36.5% in the second quarter. Vanguard Group Inc. now owns 33,938,829 shares of the social networking company’s stock valued at $573,906,000 after buying an additional 9,067,613 shares during the period. Commerzbank Aktiengesellschaft FI increased its position in shares of Twitter by 307.2% in the second quarter. Commerzbank Aktiengesellschaft FI now owns 2,886,736 shares of the social networking company’s stock valued at $48,815,000 after buying an additional 2,177,825 shares during the period. Quantitative Investment Management LLC purchased a new position in shares of Twitter during the second quarter valued at approximately $22,334,000. Contrarius Investment Management Ltd increased its position in shares of Twitter by 25.6% in the second quarter. Contrarius Investment Management Ltd now owns 4,147,508 shares of the social networking company’s stock valued at $70,134,000 after buying an additional 844,273 shares during the period. Finally, Renaissance Technologies LLC purchased a new position in shares of Twitter during the first quarter valued at approximately $13,056,000. Institutional investors and hedge funds own 41.87% of the company’s stock.
Twitter Company Profile
Twitter, Inc (Twitter) offers products and services for users, advertisers, developers and platform and data partners. The Company’s service is live-live commentary, live connections, live conversations. Its products and services for users include Twitter, and Periscope and Vine. Its Twitter is a platform for public self-expression and conversation in real time.
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