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Twitter Inc (TWTR): Great Company, But Stock Is Fully Valued

Jason Helfstein is sidelined, but out with a positive report on TWTR, believing the Street is underestimating the giant come 2019.


Oppenheimer analyst Jason Helfstein may be watching Twitter Inc (NYSE:TWTR) shape up its engagement from the sidelines, but make no mistake: this analyst is optimistic on gains ahead from the social media giant.

That said, though “near-term momentum [is] likely,” Twitter’s “long-term utility still [hovers] unknown,” leaving the analyst to maintain a Perform rating on the stock without listing a price target. (To watch Helfstein’s track record, click here)

“While TWTR remains fully valued, in our opinion, we believe there is upside to Street estimates based on: 1) improving engagement, driven by feature changes and longer character limit; 2) FB’s algorithm change; and 3) GDPR likely to hurt email marketing, with social positioned to gain share. We are also changing our model to use pricing and engagement as the main revenue drivers, and expect a similar change from the Street in coming quarters. As we move through 2018, pricing should be less of a drag as a side-effect of FB’s newsfeed change, and engagement appears to be improving. Meanwhile, our revised revenue outlook is conservative, in our view, with high likelihood of upside,” underscores Helfstein.

SimilarWeb data pinpoints direct channels are adding steam when it comes to traffic and desktop visit duration, with referral to desktop bounce rate scaling back. Anticipating the FB algorithm change will prove “positive” for Twitter, the analyst sees two upbeat impacts ahead: “1) mid-to-long tail publishers will come to TWTR to make up for lost FB traffic and seek distribution platform diversification and 2) pricing is likely to increase on FB, creating a larger pricing umbrella for TWTR.”

For now, the analyst anticipates Street expectations for next year seem “low.” Glancing to 2019, the analyst angles for expectations 2% ahead of the Street’s revenue forecast and 4% ahead of EBITDA- “with likelihood of upside.”

TipRanks indicates a split Wall Street consensus- between the bulls, the bears, and those who are hedging their bets on Twitter stock. Out of 25 analysts polled in the last 3 months, 5 are bullish on TWTR, 15 remain sidelined, while 5 are bearish. With a slight return potential of 2%, the stock’s consensus target price stands at $28.64.