Expect Muted 4Q Print for Twitter Inc (TWTR): Top Analyst

With Twitter Inc (NYSE:TWTR) set to deliver fourth-quarter earnings this Thursday, February 9th before market open, top analyst Youssef Squali at Cantor previews from a cautious stance, anticipating a “muted” print indicating “anemic growth” when considering monthly active users as well as monetization.

Ahead of the results, the analyst reiterates a Neutral rating on TWTR with a price target of $20, which represents a just under 14% increase from where the shares last closed.

For the fourth quarter, the analyst projects 319 million total active users, which denotes 2 millions net adds for the quarter, demonstrating a 4.6% year-over-year surge, which mirrors that of the third quarter. Additionally, the analyst expects revenue to increase 8.4% year-over-year to $769.8 million with EBITDA to hit $191.2 million, which would yield a beat compared to FactSet consensus expectations of $739.8 million in revenue and $180.0 million in EBITDA. When looking to guidance, the analyst opines Twitter’s outlook has good chances to meet consensus expectations of $629.2 million for revenue and $191.4 million for EBITDA in the first quarter of 2017.

Squali believes, “We expect the new strategy around live streaming of sports, entertainment and political content to yield incremental P&L impact in 4Q, but traction (or lack thereof) should have greater implications for growth in FY17, and for the stock more broadly. We view Twitter as a viable, global and differentiated platform, hit by product and execution mishaps. If management is unable to reverse sagging growth trends or show a clear path to re-acceleration, then the chance of a take-out increases materially, in our view.”

Overall, the analyst expects Twitter’s “4Q16 to shed light on success of NFL TNF live-streaming deal, and the new content strategy in general,” continuing, “While we do not expect management to break out a full accounting of the NFL Thursday Night Football streaming deal and other live events, we hope to get qualitative commentary on the success of these streaming deals, and management’s commitment to doing more of then in 2017.” Squali notes the NFL deal reportedly circled $10 million for 10 games, concluding that the social media platform monetized 15 slots out of approximately 100 per game, or $67K per ad slot.

Youssef Squali has a very good TipRanks score with a 68% success rate and a high ranking of #83 out of 4,374 analysts. Squali gains 10.9% in his annual returns. When recommending TWTR, Squali loses 16.2% in average profits on the stock.

TipRanks analytics demonstrate TWTR as a Hold. Based on 20 analysts polled by TipRanks in the last 3 months, 2 rate a Buy on Twitter stock, 14 maintain a Hold, while 4 issue a Sell. The 12-month average price target stands at $16.31, marking a nearly 7% downside from where the stock is currently trading.

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