2014 Was Eventful for Twitter, But For Better or Worse?
By Sarah Roden
Twitter (NYSE: TWTR) made many headlines in 2014 while shares had a tumultuous year. Twitter shares took a tumble in May and fell to its lowest price, approximately $37, since the company went public in the year prior. Instagram, a photo-sharing social platform, quickly surpassed Twitter in monthly active users. The company continued to report slowing growth rates throughout 2014, and it’s most recent quarterly report from October failed to impress investors. Even though the report posted earnings per share that met estimates and revenue beat the analyst consensus, many critics are growing skeptical of Twitter.
There have been recent speculations over Twitter CEO Dick Costolo stepping down, who recently sold all Twitter shares from his family trust. There has been more media attention over Twitter’s Vice President Kevin Weil selling over 6,000 shares last week for a total value of over $229,000. Additionally, Twitter Co-Founder Evan Williams sold over 370,000 shares last week for over $14 million.
Although Twitter has been in making headlines this year for better and worse, many analysts remain bullish on the stock.
On December 15th, analyst Ronald Josey on JMP Securities initiated coverage on Twitter with a Buy rating and a $49 price target. Josey explained that he liked Twitter for many reasons, including its “differentiated content” and “deep advertiser relationships.” He noted “high barrier to entry” for others in the sector, “given Twitter’s global reach and the inherent value of the real-time Web.” Josey acknowledged slow user growth and noted, “There may be some risk in the short-term around 4Q MAU growth, but we believe this is priced in at current levels and we expect MAUs to rebound in 1Q15 as overall engagement benefits from Twitter’s product improvements.”
Ronald Josey has a 66% overall success rate recommending stocks with a +9.6% average return per investment.
Separately, on December 22nd analyst Jim Kelleher of Argus Research initiated coverage on Twitter with a Buy rating a price target of $44. Kelleher did not seem fazed that Twitter shares are trading near to their 52-week low because “Twitter retains strong growth characteristics.” The analyst admired the concise nature of tweets, saying that Twitter’s strength is attributed to “The 140-character limit on each Tweet, [which] is perfectly designed for the sound-bite era.” He continued, noting that tweets fit nicely on a smartphone screen, which “eases the transition from compute screen to mobile device [and] simplifies the format transition for advertisers.”
Jim Kelleher has an 86% overall success rate recommending stocks with a +18.3% return per recommendation.
On average, the top analyst consensus for Twitter on TipRanks is Hold.
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Sarah Roden writes about stock market news. She can be reached at Sarah@tipranks.com