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.

Wednesday’s Market Insights: Twitter Inc (TWTR) and Akebia Therapeutics Inc (AKBA) Soar, United States Steel Corporation (X) Plunges


Twitter Inc (NYSE:TWTR) shares are soaring by 11% in Wednesday’s trading session following the release of surprisingly strong Q1 results. Twitter revealed better-than-expected growth in the number of monthly average users (MAU) with an increase of 6% year-on-year to 328 million, easily beating analyst expectations of 321.3 monthly users.

Similarly, the number of daily active users (DAU), another key metric, was also up with a 14% year-on-year increase. However, Q1 revenue totaled $548 million, a decrease of 8% from the previous year with ad revenue specifically down 11%- the company’s first revenue drop since its IPO. Nonetheless Twitter still managed to beat Street expectations for revenue of $517.3 million. Non-GAAP diluted EPS of 11 cents also beat the expected EPS of 2 cents.

“Twitter is becoming more relevant to consumers. They are making their products easier to use. And there is a global thirst for news and information that they are benefiting from,” says fBTIG analyst Richard Greenfield. “We believe usage will drive meaningful revenue and profit growth in the next few years.” Greenfield updated his Twitter rating to buy three months ago.

In its Q1 shareholder letter, Twitter accepts that “revenue growth to meaningfully lag audience growth in 2017” but adds that “executing on our plan and growing our audience should result in positive revenue growth over the long term.” The social media company- which recently introduced videos and live streaming to the platform- accepted that the company had benefited from President Trump’s famous tweeting habit.

TipRanks reveals that the analyst consensus rating for Twitter is Hold, with 4 buy, 14 hold and 10 sell ratings published on the stock in the last three months. From the average analyst price target of $15.04 we can see that the stock has downside potential of -7.45% from the current share price of $16.25.

United States Steel Corporation (NYSE:X) shares have crashed in today’s trading by 25% – the biggest fall in the company’s 26-year history- after the release of a very weak earnings report for Q1. The company reported an adjusted loss of 83 cents per share, completely missing the forecast profit of 35 cents. Meanwhile sales came in at $2.73 billion, well below the anticipated $2.95 billion.

“While our segment results improved by over $200 million compared with the first quarter of 2016, operating challenges at our Flat-Rolled facilities prevented us from benefiting fully from improved market conditions,” said US Steel CEO Mario Longhi in a statement.

In a grim day for shareholders, the company also issued very poor guidance for the full year. The company expects EPS of $1.50, nowhere close to the Street’s target for $3.05, and adjusted EBITDA of -$1.1 billion.

Axiom Capitals’ Gordon Johnson is also pessimistic about the prospect of a turnaround for the stock. He says “due to its troubled assets, we believe the only way out of this malaise for X is via acquisitions. However, given that will require a lot of cash, and, we believe, would be seen as negative for X’s top investors, we see continued disappointments as likely for the Pittsburgh, PA-based company.”

The company has a Moderate Buy analyst consensus rating on TipRanks with analysts split between buy and hold ratings. Due to the price plunge, the average analyst price target of $41 is 73% above the $23.66 share price.

Akebia Therapeutics Inc (NASDAQ:AKBA) shares are flying by 44% in Wednesday’s trading after the company announced an expanded partnership with Otsuka Pharmaceuticals to develop and market its anemia pill Vadadustat. The agreement will cover Europe, China and other territories- extending the original agreement signed last December which only concerned the US.

The agreement sees small biotech Akebia receive $208 million from Otsuka which is split into $73 million upfront payment and $135 million in development funding. Akebia can also receive up to $657 million in future milestone payments. If the drug receives approval in these new areas, Tokyo-based Otsuka has agreed to make royalty payments to AKBA of up to 30% on net sales.

“We are very pleased to expand our strategic relationship with Otsuka, a company who shares our vision to improve the lives of patients with kidney disease. We now have a single, strong collaborator for the two largest markets, the U.S. and Europe,” said Akebia CEO John Butler, in a statement.

The company has already begun two phase III studies of Vadadustat in non-dialysis and dialysis kidney disease patients. The drug is designed to stimulate red blood cell production and hemoglobin by replicating how the body reacts in high altitudes.

Following this latest update, Aegis Capitals’ Difei Yang reiterated her buy rating on the stock with a $25 price target- an incredible 85% upside from the current share price. Four-star Yang has a success rate of 46% and average return of 8.4% according to financial accountability engine TipRanks.

 

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