RBC Capital top analyst Mark Mahaney recently published an 8th Ad Age Survey of over 1,100 advertising professionals, including marketers, agency representatives, marketing consultants, and media companies with the purpose of gauging how the industry feels towards online advertising. The results proved to be concerning in regards to Twitter Inc (NYSE:TWTR).
As a result, Mahaney downgrades TWTR from a Sector Perform to an Underperform rating, while cutting the price target from $17 to $14, which represents a nearly 25% downside from where the stock is currently trading.
The analyst explains, “This change is based on our belief that Twitter’s value proposition to advertisers could be waning, based on our recent advertiser survey data. We note that we still believe Twitter is a unique asset with a strong value proposition to core users.”
First, Mahaney mentions a concern regarding whether when or even if product and user interface (UI) changes can “stabilize or reaccelerate User & Usage.”
Second, Mahaney believes that the past four surveys he has taken, including predominantly this most recent advertising survey data coupled with channel checks reveal a clear lack of evidence that a significant enough amount of advertisers intend to “commit meaningful $s to TWTR.”
“Twitter believes it can command premium ad pricing, but its dramatic ad revenue deceleration doesn’t support that. We have believed that Twitter’s lack of real-time commercial intent (a la Google) and detailed, authentic profiles (a la FB) will eventually limit growth. That said, we could become more positive on Twitter if it shows meaningful traction with advertisers,” Mahaney concludes.
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 Mark Mahaney has achieved a high ranking of #8 out of 4,189 analysts. Mahaney upholds a 66% success rate and garners 21.1% in his annual returns. When recommending TWTR, Mahaney realizes 6.2% in average profits on the stock.
TipRanks analytics indicate TWTR as a Hold. Based on 32 analysts polled in the last 3 months, 6 rate a Buy on TWTR, 22 maintain a Hold, while 4 issue a Sell. The 12-month price target stands at $17.89, marking a nearly 4% downside from where the shares last closed.
In a research report released yesterday, Argus analyst Jim Kelleher upgraded shares of Amazon.com, Inc. (NASDAQ:AMZN) from Hold to Buy, with a price target of $935, which implies an upside of 16% from current levels.
Kelleher wrote, “While the growth engine at Amazon is unmatched, the stock has been difficult to time from a valuation perspective. Based on our historical comparables analysis and discounted free cash flow valuation, we believe Amazon’s growth prospects are accelerating more rapidly than the share price, thus creating a favorable entry point.”
“We expect ongoing volatility in the shares, given the company’s sensitivity to the holiday shopping season and need to invest in growth initiatives such as AWS and Prime. Given the company’s indisputable franchise leadership, its ability to leverage its vendor relationships in the retail space, and its market dominance and superior growth in infrastructure-as-a-service, we believe AMZN warrants long-term accumulation in most equity accounts. Once having established an initial position, we would look to add to AMZN holdings on weakness, based on the company’s unique position straddling the consumer discretionary and information technology sectors,” the analyst continued.
According to TipRanks, analyst Jim Kelleher has a yearly average return of 10.4% and a 67% success rate. Kelleher is ranked #247 out of 4189 analysts.
Out of the 44 analysts polled by TipRanks, 40 rate Amazon stock a Buy, while 4 rate the stock a Hold. With a return potential of 9.0%, the stock’s consensus target price stands at $875.58.