What to Look for in Twitter Earnings

Twitter Inc. (NYSE: TWTR) is set to report its fourth-quarter financial results after the markets close on Wednesday. The consensus estimates call for $0.12 in earnings per share (EPS) on $709.94 million in revenue. In the same period of last year, it posted EPS of $0.12 and $479.08 million in revenue.

The stock was hammered again after reporting earnings and user numbers that came in below expectations in the last quarter. Twitter is either a total value tech buy or caught in a death spiral, depending on who you ask on Wall Street. High multiple valuations and overall terrible negative market sentiment has trampled the stock and made it a favorite target of short sellers.

SunTrust analysts remain positive on the stock and, with exception of a few additional Wall Street firms, everybody else has given up on the Twitter story, which does make it a solid contrarian play. One main problem is the company added only 2 million core monthly active users, which the analysts feel are stabilizing. The analysts also cite management stabilization and clarification as a key driver for the stock.

Some analysts feel that while challenges remain, they think current estimates are reasonable, and the users metrics have at least stabilized. They also think it is also a potential takeover target. In addition, the impact of Double Click, Tellapart the new ad units and expanded self-serve should help monetization. It’s also important to remember that the Google traffic partnership is a catalyst that lies in front of the stock.
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A few analysts recently weighed in on Twitter:

• Mizuho reiterated a Neutral rating with a $21 price target.
• Cantor Fitzgerald reiterated a Buy rating with a $45 price target.
• Wedbush reiterated a Hold rating.
• SunTrust reiterated a Buy rating with a $26 price target.
• Stifel downgraded Twitter to Sell from Hold and lowered its price target to $14 from $30.

So far in 2016, Twitter has vastly underperformed the market, with the stock down nearly 38%. Over the past 52 weeks, the stock has dropped about 70%.

Shares of Twitter were trading at $14.86 on Wednesday, with a consensus analyst price target of $29.73 and a 52-week trading range of $14.31 to $53.49.