Analysts Very Cautious Against Twitter

November 23, 2013 by Jon C. Ogg

Twitter Inc. (NYSE: TWTR) is now two weeks old and it is still valued somewhere around 50-times sales. The stock lost about 3% this last week and shares were right at $41.00 at the close of the trading day on Friday. Twitter is now a stock that can be sold short and it has stock options trading as well. 24/7 Wall St. wanted to give an analyst montage again to see just how positive or negative Wall Street is on its valuation.

Keep in mind that the underwriters still cannot initiate coverage until mid-December as they are in the post-IPO quiet period. These are the analyst calls we have seen since the company’s IPO:

BTIG assigned a Neutral rating this last week.

Cantor Fitzgerald initially started coverage with a Buy rating ahead of the IPO with a $32 price target. The Cantor call was downgraded this last week to an official Hold rating.

Evercore Partners issued an Overweight rating before Twitter opened, and its price target was $43 for the stock.

Morningstar initiated coverage with a Sell rating and it gave a $26 fair value target, which matches the IPO price valuations.

Pivotal Research issued a downgrade alert on the day of the IPO, saying it should fall down to a $30.00 price target.

RBC Capital Markets initially started coverage with an Outperform rating but its price target was down at $33.

R.W. Baird initiated coverage at a Neutral rating.

S&P Equity Research issued a Sell rating, along with a $30 price target. Despite making positive business comments, S&P’s $30 target is still 500-times its expected 2015 earnings per share.

Susquehanna assigned a Neutral rating.

Sterne Agee gave Twitter a Neutral rating and assigned downside price target valuations. The base case should be worth at least $25 to $32 in the next 12 to 24 months.

UBS assigned a Neutral rating and a $45 price target.

Wedbush Morgan initiated coverage with a Neutral rating.

Wunderlich Securities started coverage with a Sell rating and said that the stock was worth $34 based upon its valuation.

One thing remains here, and that is that Wall Street analysts who were not in the underwriting syndicate are generally very cautious. After pricing at $26, Twitter’s post-IPO trading range has been $39.40 to $50.09.

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