Harriet Lefton

About the Author Harriet Lefton

Harriet originates from the UK where she worked as a journalist specializing in the metal markets. She graduated from the University of Cambridge before becoming a qualified UK lawyer.

Thursday’s Equity Insights: Twitter Inc (TWTR), Facebook Inc (FB), AstraZeneca plc (AZN)

Twitter Inc

Shares in Twitter Inc (NYSE:TWTR) tumbled nearly 14% in Thursday’s trading, after the social networking service reported second quarter results, with zero monthly active user growth. In other words, the numbers of users have stayed flat at 328 million since Q1. However, the number is up 5% from the same period the previous year. In contrast, Facebook has 2 billion users.

Most of the benefit of President Trump’s Twitter usage was seen by the first quarter of the year when monthly active users grew by an impressive 9%. Twitter explained the disappointing figures on “lower seasonal benefits.” The company also said that, on the positive side, daily active users were becoming more engaged with the site due to a range of initiatives including push notifications, email alerts and timeline changes.

The news completely overshadowed the fact that Twitter actually delivered a beat on both the top and bottom lines in its earnings results for Q2. TWTR reported EPS of $0.12 on revenue of $574 million. This compared with the Street consensus estimate going into the print of $0.05 EPS with revenue of $534 million.

TipRanks reveals that the stock has a Hold analyst consensus rating. In the last three months the stock has received 2 buy, 10 hold and 4 sell ratings. Meanwhile the average analyst price target of $16.27 stands at a -3.38% downside from the current share price.

Facebook Inc

Shares in social media giant Facebook Inc (NASDAQ:FB) rose nearly 3% today, following the release of strong results for the second quarter. The social media giant reported a 71% leap in Q2 profit and a 50% rise in its mobile ad sales figures- results that clearly demonstrate there is no slowdown around the corner just yet.

Facebook beat on all the key metrics. EPS came in at $1.32 vs the expected $1.13, while revenue of $9.32 billion easily surpassed the anticipated $9.2 billion. Monthly users now stand at 2 billion while mobile ad revenue reached $8 billion in the quarter.

The boom is down to new growth drivers like WhatsApp, Instagram and Messenger that provide fertile ground for Facebook to extend its ad reach. For example, 15 million businesses already have pages on Instagram. Another key ad driver is Facebook’s move towards video. And this is an area where Facebook plans to expand going forward. FB plans to create its own content that will be in the form of short-episodes.

Following the results, analysts raised their price targets to reflect the bullish outlook for the stock. Five-star UBS analyst Eric Sheridan for example raised his price target from $168 all the way to $190 as he said the stock showed strength across the board. Similarly, Goldman Sachs’ top analyst Heather Bellini raised her price target all the way from $180 to $205.

Facebook “continues to be well-positioned in one of the best secular markets … we continue to see opportunities for incremental ad load on Instagram, increased engagement from Instagram stories, and (while early) potential for new monetization levers through Messenger and Whatsapp” says Bellini.

Indeed, TipRanks shows that the stock has received a whopping 32 buy ratings, 3 hold ratings and 1 sell rating in the last three months giving it an overall analyst consensus rating of Strong Buy. The average analyst price target of $183.19 suggests upside of 7.5% from the current share price.

AstraZeneca plc (ADR)

Shares in UK-based global pharma AstraZeneca plc (ADR) (NYSE:AZN) crashed nearly 15% today due to a failed lung cancer study. AZN has revealed that its highly-anticipated MYSTIC clinical trial did not manage to show that patients lived longer without the cancer growing than with current chemotherapy options. The drug under trial was a combination of two AZN drugs- durva and treme. Overall survival rates for the drug are still to come in the first half of 2018.

Following the news shares in AZN rival pharmaceuticals rose, in particular in Merck & Co which manufactures treatments for lung cancer that have proved resistant to other drugs. At the same time, concerns lurk that current AZN CEO Pascal Soriot could be planning to leave the company and take up the head position at Teva Pharmaceuticals. Soriot has downplayed this claim. “I’m not a quitter,” Soriot said, adding: “The only thing I can tell you is I am here today.”

Meanwhile, AstraZeneca released earnings results that revealed falling drug sales, hurt by the expiration of a patent for key cholesterol drug Crestor. Revenue fell 10% from the first quarter. However, AZN did actually beat Street estimates with EPS of $0.87 on revenue of $5.05 billion. This compares to the consensus going into the print of $0.80 EPS on revenue of $5.0 billion.

In the last three months, AstraZeneca has received 3 hold ratings from analysts. The average analyst price target of $32.50 stands at a 18% upside from the current share price. The upside is partly due to the fact that shares have fallen so far since the price targets were issued.


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