One rating agency in the United States says Twitter’s (NYSE: TWTR) stunning rally this year is due for a big pullback
Nomura Institute initiated coverage on the social media company’s shares with a reduce rating, predicting it will report earnings below expectations next year.
"We view Twitter as a stable and extremely valuable platform with long-term strategic value," analyst Mark Kelley said in a note to clients Tuesday. "However, we see some downside risk to consensus estimates for 2019, particularly to the 1H monetization levels the Street is currently looking for. This, paired with the recent run and current valuation, leaves us expecting a reset to expectations and the stock."
The company’s shares are up 82.2% so far this year through Tuesday versus the S&P 500’s 4.5% gain. The shares are down 98 cents, or 2.2%. early Wednesday morning to $42.77
Kelley started his price target for Twitter’s stock at $31.00, representing 29% downside to Tuesday’s close.
After Friday’s market close the Washington Post reported Twitter was ramping up its efforts in closing fake accounts. The article stated about 70 million accounts were suspended in May and June, with a similar pace continuing in July. Shares of Twitter closed down 5.4% Monday.
In another report on Wednesday, Evercore ISI raised its price target to $42.00 from $32.00 for Twitter shares, citing positive conversations on business trends from ad buyers during the second quarter. The firm reiterated its in-line rating for the company’s stock due to its valuation.
