Now that Twitter Inc (NYSE:TWTR) has raised $1.8 billion in convertible bonds, $900 million due in 2019 at 0.25% interest and another $900 million due in 2021 at 1.00%, Goldman Sachs analyst Heath Terry has adjusted his valuation of the company by pulling EPS estimates down while leaving his price target in place.

“Our 2014-2016 adjusted EPS estimates decrease by 6% on average to reflect the increased interest expense from the convertible debt offering,” writes Terry, who rates Twitter Inc (NYSE:TWTR) a Buy. “There are no changes to our revenue or adjusted EBITDA estimates or to our price target.”

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Goldman Sachs pricing Twitter at 75x 2015 EV/EBITDA

Terry sets a $63 price target based on 75x 2015E EV/EBITDA and 18x 2015E sales, so he is bullish on Twitter Inc (NYSE:TWTR) but not significantly more bullish than the rest of the market. Dropping estimated EPS 6% without changing the price target at all is basically saying that you expect some multiple expansion (or would be if Twitter was profitable), but when you’re talking about 75x EV/EBITDA multiples for the stock anyways you’re already betting on enormous growth.

Terry expects Twitter Inc (NYSE:TWTR) to bring its EPS losses down from $2.57 in 2013 and an estimated $0.98 in 2014 to a $0.50 EPS loss in 2016, though he doesn’t speculate in this note when Twitter will become profitable. He also expects revenues to increase from $665 million in 2013 to more than $4 billion by the end of 2016 as the company ramps up the advertising side of its business.

Investors bought Twitter convertible bonds to hedge against a market correction

Twitter Inc (NYSE:TWTR) was taken aback by the amount of interest in its debt offering, which should give other investors a hint that the smart money is starting to worry about a possible correction. Buying convertible bonds gives investors a way to increase their exposure to Twitter without taking big losses if the social media site fails to attract new users or monetize its product and eventually gets punished by the market. On the other hand, if Twitter can join Google Inc (NASDAQ:GOOG) and Facebook Inc (NASDAQ:FB) as one of digital advertising’s major players then convertible bondholders can swap their low yielding assets in for stocks and take part in the company’s good fortune.