Twitter Inc (NYSE:TWTR) is dominating the rumor mill with press reports circling stories of potential buyers seeking to acquire the social media titan, from Alphabet Inc (NASDAQ:GOOGL), salesforce.com, inc. (NYSE:CRM), Walt Disney Co (NYSE:DIS), Microsoft Corporation (NASDAQ:MSFT) to Verizon Communications Inc. (NYSE:VZ).
In light of the reports, Axiom top analyst Victor Anthony shares perspective on what these acquisition possibilities could mean for the stock, reiterating a Buy rating on shares of TWTR with a $16 price target, which represents a nearly 32% downside from where the stock is currently trading.
In regards to Verizon and Microsoft, Anthony notes both are less viable contenders, as the former is mid-acquisition of Yahoo! while the latter is navigating the acquisition process of LinkedIn, respectively.
Conversely, Anthony sees Alphabet as a logical candidate, as the analyst believes GOOGL could yield cost synergies, specifically those for engineering and marketing headcount. The analyst notes, “We have said numerous times in the past that Twitter would complement Google’s search platform, and be tightly integrated into YouTube and the Google Display Network.”
In the wake of Salesforce’s now-fizzled attempt to buy LinkedIn, Anthony sees all the reasons for the company to want to buy TWTR, which the analyst views as “their only option at this time,” unless CRM buys Snap Inc., a “highly unlikely” possibility. Anthony believes that even acknowledging TWTR’s “current challenges around weak user growth […] and decelerating O&O advertising growth, the platform is unique and remains one of the world’s most valuable real-time content networks.”
As far as Disney’s interest in acquiring Twitter, to the analyst this is an “interesting” idea. “With the success of the NFL and debate streams, Twitter has proven that it is a platform for distribution of live video content,” Anthony asserts, and contends Disney could maximize Twitter’s platform to accelerate its hopes to leap forward in online content distribution.
Ultimately, “If investors are long the stock, they could look to sell an upside call out to January and buy a downside put out to January against it,” the analyst concludes. Anthony does not anticipate shares will fall under $17 even without an imminent acquisition ahead, due to “persistent M&A speculation.”
As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, top five-star analyst Victor Anthony has achieved a high ranking of #43 out of 4,185 analysts. Anthony upholds a 67% success rate and yields 14.1% in his annual returns. However, when recommending TWTR, Anthony faces a loss of 13.8% in average profits on the stock.
TipRanks analytics exhibit TWTR as a Hold. Based on 32 analysts polled in the last 3 months, 5 rate a Buy on TWTR, 19 maintain a Hold, while 8 issue a Sell. The consensus price target stands at $18.11, marking a nearly 24% downside from where the shares last closed.