Axiom analyst Victor Anthony came out today with a report on Twitter Inc (NYSE:TWTR), downgrading shares to Hold from Buy and reducing the price target to $45 from $63 due to increased operating risk.
Anthony explained, “We continue to believe that there is enormous longer-term potential for Twitter, and overtime, product enhancements and advertiser products should drive user and revenue growth. However, near-term operating risks are exerting pressure on revenue growth, and MAUs have begun to slow once again. Our 2015 revenue estimate was reduced by 7% and our Adjusted EBITDA was reduced by 6%.”
“We now project that Twitter will grow revenues and Adjusted EBITDA at 45% and 75% three-year CAGRs (2014-2017), respectively, down from 56% and 83%, previously. We have also reduced the target multiple in our valuation. The increased risks at relatively high multiples (13x ’15 sales & 52x ’15 EBITDA) make the bull case for buying the stock challenging. While the pullback will seem enticing to some, we await a more meaningful contraction in the multiples before getting constructive on the shares.”, the analyst added.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Victor Anthony has a total average return of 18.5% and a 69.4% success rate. Anthony has a -4.0% average return when recommending TWTR, and is ranked #57 out of 3583 analysts.