Twitter stock has skyrocketed over the last three months, climbing 47% and surpassing $50 per share. Analysts are generally still positive on the micro-blogging platform, but they’re starting to become concerned about the valuation.
As a result, analysts at Pivotal Research Group downgraded Twitter from Buy to Hold but maintained their $51 per share price target.
Time to take profits from Twitter?
In a report dated March 25, analyst Brian Wieser said he thinks it’s time to take some money out of Twitter because of the momentum that has carried shares much higher since his upgrade in December. At the time of his upgrade, he thought the weakness in Twitter was overdone even though investors were understandably worried about issues like management turnover, and insider selling of shares.
Now, however, he said Twitter shares have risen to a level at which he thinks they are fairly valued.
Will Twitter’s momentum reverse?
He also thinks that the momentum which has carried the stock so high so fast could reverse. He noted that on Tuesday, Twitter stock moved up by 6%, which he thought was “somewhat extreme.” He thought the recent news about auto-play video ads should already have been baked into Twitter stock because it has been expected that Twitter would roll it out at some point.
The analyst does note that any other positive news could carry Twitter shares even higher right now, and he thinks that Twitter offers long term value for investors who have “extended time horizons.” However, he still thinks Twitter’s business in in a sort of “venture stage,” and he said he would remain on the sidelines because of the volatility the stock has exhibited.
Still positive on Twitter’s operations
He wants to see more solid proof that Twitter is worth a price target that’s high enough to earn back a Buy rating. Overall though, he remains positive on the micro-blogging platform’s operations, calling them “favorable.”
He still thinks Twitter’s “unique qualities” as a “consumer and advertiser platform and its stellar efforts in building relationships with Madison Avenue” make the company a stand-out even though he is now concerned about valuation.
As of this writing, shares of Twitter were down 3.17% to $49.84 per share.