Earlier Friday, Wedbush analyst Michael Pachter cut price targets on social giants Twitter Inc (NYSE:TWTR) and LinkedIn Corp (NYSE:LNKD), in light of impending and recent earnings reports. Below are the changes along with current ratings and comments.
With Twitter preparing to release fourth-quarter earnings on Wednesday, February 10, Michael Pachter reiterated a Neutral rating on the stock, while reducing the price target to $20 (from $30), as he believes that the company will struggle with growth in advertising revenue so long as its service remains difficult to use, resulting in slow user growth.
Pachter wrote, “We believe positive ad pricing trends drove Q4 revenue towards the high-end of guidance, but user growth likely was stagnant. Our estimates are for revenue of $715 million, adjusted EBITDA of $175 million, and EPS of $0.10, versus consensus for revenue of $710 million, adjusted EBITDA of $175 million, and EPS of $0.12, and guidance for revenue of $695 – 710 million and adjusted EBITDA of $155 – 175 million.” The analyst continued, “Twitter remains difficult to use relative to its peers, and a solution does not appear to be imminent. MAUs excluding Fast Followers increased by only 5 million to 307 million from Q1 to Q3.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Michael Pachter has a yearly average return of -9.6% and a 34.5% success rate. Pachter has a -45.2% average return when recommending TWTR, and is ranked #3557 out of 3621 analysts.
Out of the 19 analysts polled by TipRanks in the last 3 months, 9 rate Twitter stock a Buy, 7 rate the stock a Hold and 3 recommend a Sell. With a return potential of 59.31%, the stock’s consensus target price stands at $26.95.
In addition, Pachter reiterated a Neutral rating on shares of LinkedIn, while lowering the price target to $200 (from $232), after the company reported solid fourth-quarter results, but 2016 guidance was below estimates for revenue.
Pachter commented, “Revenue was $862 million, versus our estimate of $855 million, consensus of $858 million, and guidance of $845 – 850 million. EBITDA was $249 million, versus our estimate of $212 million, consensus of $217 million, and guidance of $210 million. EPS was $0.94, versus our estimate of $0.75, consensus of $0.78, and guidance of $0.74.”
“The quarterly beat was overshadowed by disappointing guidance. Notwithstanding the EBITDA upside in Q4, the company guided to a modest sequential decline in revenue and a dramatic decline in EBITDA, reflecting a contraction of its EBITDA margin in Q1. LinkedIn shares were sharply lower in the aftermarket, as investors appear unimpressed that the company intends to invest in driving growth in 2016,” the analyst continued.
Out of the 15 analysts polled by TipRanks in the last 3 months, 8 are bullish on LinkedIn stock, while 7 are neutral. With a return potential of 9.50%, the stock’s consensus target price stands at $210.55.