What Top Analysts Think About TWTR Stock

by Alyssa Oursler | December 2, 2013 11:47 am

The 25-day quiet period the SEC requires after an IPO just ended for Twitter (TWTR[1]) — the hot social media startup that had all eyes on Wall Street last month.

Twitter185 What Top Analysts Think About TWTR StockAs a result, TWTR stock underwriters from Deutsche Bank to Goldman Sachs have been issuing their ratings. But that hasn’t really been good news for Twitter stock investors.

So far today, TWTR stock is down nearly 2% in early trading today. Of course, the current Twitter stock price of almost $41 is still almost 60% higher than the Twitter IPO price.

Maybe that run-up is part of the reason that, out of the five underwriters for the Twitter IPO, only two rated shares of TWTR stock a “buy.” Meanwhile, one was quick to slap Twitter stock with a “sell” rating.

Here’s a breakdown of what Twitter IPO underwriters think about TWTR stock right now:

TWTR Stock Rating: “Buy” from Deutsche Bank

db What Top Analysts Think About TWTR Stock

TWTR Stock Price Target: $50
% Upside for TWTR Stock: 22%

The first of the major stock underwriters is Deutsche Bank. While the overall initial coverage for TWTR stock wasn’t as bullish as expected, it wasn’t because of DB.

Of all the Twitter stock analysts, Deutsche Bank was the most bullish … and not just because Deutsche Bank rated TWTR a “buy.” The firm also placed a price target of $50 on shares of TWTR — more than 20% upside from here, and representing double the Twitter IPO price.

DB is a fan of Twitter’s rival Facebook (FB[2]), too, as it recently reiterated its “buy” rating on FB stock and upped the price target.

TWTR Stock Ratings: “Buy” from Goldman Sachs

goldman sachs What Top Analysts Think About TWTR Stock

TWTR Stock Price Target: $46
% Upside for TWTR Stock: 12%

Another “buy” rating on Twitter stock came courtesy of Goldman Sachs.

“We believe there is substantial long-term value in Twitter’s potential to become the leading platform for real time mass communication,” Goldman Sachs analyst Heath Terry[3] said about TWTR.

“As Twitter grows users, engagement, and monetization through product enhancements, geographic expansion, and advertiser adoption, we see opportunity for growth acceleration and positive estimate revisions. While its growth trajectory is unlikely to be linear, we believe these revisions will, over time, justify considerable upside,” he added.

TWTR Stock Rating: “Neutral” from JPMorgan

JPMorgan185 What Top Analysts Think About TWTR StockTWTR Stock Price Target: $40
% Downside for TWTR: -2%

JPMorgan, the next Twitter stock underwriter, more or less shrugged at its potential.

Not only did it give TWTR stock a “neutral” rating,” but its target for Twitter stock is right around the current price.

As The Wall Street Journal noted[4], JPMorgan said about the TWTR stock rating: “We believe Twitter has fundamentally changed the way people communicate and consume information… However, we believe Twitter is fairly valued at current levels.”

TWTR Stock Rating: “Equal-Weight” from Morgan Stanley

MorganStanley185 What Top Analysts Think About TWTR Stock

TWTR Stock Price Target: $40
% Downside for TWTR:  -2%

Morgan Stanley also thinks TWTR stock is going nowhere fast, echoing JPMorgan’s middle-of-the-road rating and more or less flat price target.

The reasoning was the same as well: Twitter stock’s valuation.

As Business Insider noted[5], analysts at Morgan Stanley said about TWTR stock: “We are optimistic on Twitter’s ability to expand the socially enabled ad market and take share of TV ad budgets with its “second-screen” ad products. However, a current ~$30b enterprise value appears to reflect a high likelihood of success with these still-nascent initiatives.”

TWTR Stock Rating: “Underperform” from Bank of America

bank of america What Top Analysts Think About TWTR Stock

TWTR Stock Price Target: $36
% Downside for TWTR: -12%

The most bearish of Twitter stock analysts was Bank of America, as it expects TWTR to fall in the double digits from here.

Why was BoA so down on TWTR stock? The report said, “Twitter is a top mobile and social play in a thematically focused investment environment, and is still early in its opportunity to capitalize on its interest graph … However, with the stock discounting outstanding execution and upside potential at 21x 2015 EV/Sales (vs. group at 7.5x), we have lower conviction on near-term stock upside vs. peers.”

As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.

Endnotes:
  1. TWTR: http://studio-5.financialcontent.com/investplace/quote?Symbol=TWTR
  2. FB: http://studio-5.financialcontent.com/investplace/quote?Symbol=FB
  3. Goldman Sachs analyst Heath Terry: http://www.streetinsider.com/Analyst+Comments/Goldman+Sachs+Starts+Twitter+%28TWTR%29+at+Buy%2C+%2446+Target/8936329.html
  4. As The Wall Street Journal noted: http://blogs.wsj.com/moneybeat/2013/12/02/quiet-period-over-twitters-underwriters-weigh-in/?mod=WSJBlog
  5. As Business Insider noted: http://www.businessinsider.com/twitter-stock-ratings-from-goldman-jp-morgan-and-morgan-stanley-2013-12

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