Here’s why Twitter Inc (NYSE:TWTR) investors got a taste of turnaround excitement yesterday: the social media comeback player revealed the development of key live content and streaming partnerships with both Walt Disney (NYSE:DIS) as well as Viacom (NASDAQ:VIA). Shares flew about 5% yesterday on back of the content partnerships that have two of Wall Street’s top analysts sharing positive insights.
Top analyst Colin Sebastian at Baird is reassured to see “another positive development” even as he weighs in from the sidelines. For now, the analyst reiterates a Neutral rating on TWTR stock with a $33 price target, which implies a close to 9% upside from where the shares last closed.
“While details around the content/advertising are pending, we believe these moves highlight Twitter’s growing relevance as a distribution platform (signed >30 live streaming partnerships in 1Q18 including Fox Sports, MLB, MLS, and PeopleTV), and should provide tailwinds for Twitter’s video advertising business (video accounts for >50% of TWTR ad revenue and is fastest growing ad format),” highlights Sebastian, who adds on an upbeat note: “Disney + Viacom represent two of the biggest partnership wins to-date.”
After all, “While Twitter has participated in dozens of live-streaming partnerships before, the Disney news represents the biggest vote of confidence in Twitter as a media brand to date,” continues the analyst, underscoring that these wins “could open the floodgates for similarly-structured content deals going forward.”
This is a company that has been making key waves throughout the last year, notes the analyst, and these deals have a hook on bolstering Twitter’s user experience while driving engagement. Sebastian makes an optimistic call: “We believe Disney/ESPN/Viacom content will attract a broader audience than some of the smaller partnerships, particularly.”
Colin Sebastian has a very good TipRanks score with a 73% success rate and one of the most impressive rankings on the Street: #12 out of 4,772 analysts. Sebastian garners 24.9% in his yearly returns. When rating TWTR, Sebastian earns 0.0% in average profits on the stock.
Top analyst Victor Anthony at Aegis echoes Sebastian’s positive sentiment, spotlighting a jump in engagement and ad revenue waiting on the horizon for TWTR. Make no mistake- these media partnerships are allowing Twitter to prove itself as a credible user and advertiser platform making an encouraging comeback. In fact, Anthony sees odds on this not being the last of Twitter’s footsteps into media partnerships, but rather just the beginning.
In reaction, the analyst maintains a Buy rating on TWTR stock with a $40 price target, which implies a just under 32% upside from where the shares last closed.
Bottom line, “Both Disney […] and Viacom […] are announcing partnerships with Twitter to deliver content, including live and unique to Twitter content, on Twitter. We see both deals driving higher engagement on Twitter and driving incremental ad revenue. In Disney’s case, if they chose not to buy Twitter in the past, then the next best thing was to more deeply integrate their media content into Twitter. Beyond the engagement and revenues, the partnerships with the major media companies, in our view, validates Twitter as an increasingly effective user and advertiser platform, and one that has turned the corner. We are likely to see more media partnerships in the future. ESPN kicks it off first with sports content, which should be a driver of engagement and time spent, given ESPN’s passionate demo. For the media companies, Twitter can drive new users to their content and networks, as they get to share in the ad revenue. We await more details on the financial part of the agreements,” concludes Anthony.
Victor Anthony has a strong TipRanks score with a 67% success rate and a high ranking of #69 out of 4,772 analysts. Anthony realizes 17.3% in his annual returns. However, when recommending TWTR, Anthony forfeits 14.3% in average profits on the stock.
TipRanks exhibits TWTR is a stock that has Wall Street largely divided on its turnaround prospects. Out of 27 analysts polled in the last 3 months, 6 are bullish on TWTR, 17 remain sidelined, while 4 are bearish on the stock. The 12-month average price target stands at $30.22, which aligns evenly with where the stock is currently trading.