RBC Capital’s Mark Mahaney Offers Commentary on Twitter Inc (TWTR) and Expedia Inc (EXPE) Following Earnings


Top-ranked analyst Mark Mahaney of RBC Capital weighed in on social media giant Twitter Inc (NYSE:TWTR) and online travel giant Expedia Inc (NASDAQ:EXPE) after both companies released earnings yesterday. The analyst remains on the sidelines for Twitter, pointing to soft guidance and a decrease in users though upbeat on product changes. However, he changes his tone on Expedia, bullish on the company going forward due to a stellar quarter. Mark Mahaney is ranked #28 out of 3,659 analysts on TipRanks. He has a 51% success rate recommending stocks with an average return of 14.2% per recommendation.
Mark Mahaney Stats

Twitter Inc

Mahaney weighed in yesterday on Twitter after the company posted its Q4 earnings yesterday after market close. The company posted revenues of $710 million, missing his $713 million estimates. Twitter also provided below consensus revenue guidance for the next quarter though did not provide full year revenue guidance due to “uncertainties.”

Of particular concern to Mahaney regarding earnings were flat monthly active users, which declined q/q for the first time in the U.S, despite management noting a January recovery. The analyst also mentioned declining ad revenue growth, and based on his firms surveys he does not see “convincing evidence that a substantial number of advertisers will commit meaningful $s to TWTR.” In fact, his surveys “have actually showed declining advertiser interest,” further fueled by the “Q1 guide (which) implies more deceleration.” Mahaney also comments on relatively flat margins going into 2016, though he believes now marks the right time to invest, as “Twitter HAS TO grow its user base.” Finally, the analyst comments on announced product updates in an effort to stay relevant, such as changing the timing of tweets. He states, “we see the company aggressively experimenting with its product … and that’s a step in the right direction.”

On February 10, 2016, the analyst maintained his Sector Perform rating and lowered his price target to $23 from $34. According to Mahaney, Twitter is “a very sizeable platform, with a unique value proposition, strategic significance, still premium topline growth, and margin expansion capability. 

According to TipRanks’ statistics, out of the 28 analysts who have rated the company in the past 3 months, 11 gave a Buy rating, 3 gave a Sell rating, while 14 remain neutral. The average 12-month price target for the stock is $23.89, marking a 67% upside from current levels.

Expedia Inc

Mahaney also weighed in on EXPE shares after the company posted its Q4 earnings results yesterday after market close. Overall, he believes the company had a positive quarter due to several factors such as growth in units, organic bookings, and ahead of schedule acquisitions of Orbitz and HomeWay. He credits “light” EPS and slightly below consensuses gross bookings and revenue to “M&A modeling challenges.” However, he cites better than expected 2016 guidance in relation to macro challenges.

Although the Airbnb acquisition “could become a challenge at some point,” he cites a compelling entry point for shares. He states, “The Market has assumed a boat tossed on violent Macro seas, but we see steady sailing.”  Mahanoy believes that “EXPE has emerged as an excellent play on the secular growth in Online Travel and as a strong integrator of assets,” comparing the company to “industry leader PLCN.” Other positives according to the analyst are “the company’s strong balance sheet and dividend paying status.”

On February 10, 2016, the analyst reiterated his Outperform rating on the company and lowered his price target to $165 from $180.

According to TipRanks’ statistics, out of the 8 analysts who have rated the company in the past 3 months, 5 gave a Buy rating while 7 remain neutral. The average 12-month price target for the stock is $145.67, marking a 41% upside from current levels.