Twitter’s big revenue miss on Tuesday sent investors running for the hills.
There was no shortage of bad news in the report, from a shortfall in direct response advertising that will weigh on revenue growth this year, to slow user growth trends in April.
The report is sure to keep Wall Street analysts busy revising their models, their price targets and their ratings, for Twitter.
One of the first analysts out of the gate after Twitter’s Q1 earnings was Pivotal Research Group’s Brian Wieser, who was quick to change his rating on Twitter’s shares…to a Buy!
The upgrade is due to the precipitous plunge in Twitter’s stock. With shares down more than 18 per cent, there’s upside.
Wieser even lowered his price target on the stock from $US54 to $US50 after Tuesday’s earnings. But after the stock plunge, his price target is still well above the $US41.58 level at which shares were trading in after-hours on Tuesday.
“Overall, Twitter’s long-term potential as a differentiated niche offering in digital advertising is mostly uncharged,” writes Wieser, who had downgraded Twitter to a Hold rating just last month.
“Our valuation is dependent on expectations that Twitter can capture a growing share of global digital advertising, and this view remains mostly unchanged, if slightly diminished. Consequently our price target only falls slightly.”
Prior to Tuesday’s earnings, Twitter was rated a Buy or Strong Buy by 19 analysts and a Hold by 20 analysts. Two analysts rated Twitter a Sell or Underperform. Look for these ratings to change on Wednesday when Wall Street’s ranks of Twitter analysts release their post-earnings notes.