Twitter’s Post-Earnings Rally Adds $4 Billion in Market Value

(Bloomberg) -- Twitter Inc. closed at its highest since last summer, adding more than $4 billion to its market valuation after reporting a revenue beat for the first quarter.

Analysts cheered as daily average user growth (DAU) topped estimates, prompting Cowen to upgrade the stock and Raymond James to moderate its risk/growth assessment.

Here’s what Wall Street is saying:

RBC Capital Markets, Mark Mahaney

Twitter “continues to execute significantly better, and those 8MM DAU adds feel like a potential inflection point.” Taking a bullish stance, RBC is still looking for simpler valuation or further evidence that health improvements or new growth curve initiatives will sustain or accelerate current revenue and DAU growth rates.

Rates sector perform, raises PT to $38 from $34

Jefferies analyst Brent Thill

DAU growth was the biggest gain since Twitter began disclosing the metric and better engagement is an important sign that promoting the right content for users and improved on-boarding is now paying off. “Things are on the right path, but investment will continue in ’19 to focus on health/safety/revenue products and improving conversation on Twitter.”

Rates hold, PT $33

Cowen, John Blackledge

Improved advertising growth prospects, Twitter’s +18 percent year-over-year revenue growth and a 2 percent consensus beat prompted an upgrade to market perform band a price target boost to $36 from $24.

“We also significantly raised our Operating Income (GAAP) forecast near and longer-term, to account for the big 1Q19 beat, as well as higher topline.”

Raymond James, Aaron Kessler

“While we are positive on the better continued DAU growth, advertising fundamentals, and better operating income, advertising fundamentals of Twitter, we believe shares are fairly valued at 18x 2020E EBITDA and ~7x 2020E revenues given our outlook for ~mid-teens long-term revenue growth. ”

Reiterates market perform, changing suitability from High Risk/Growth to Medium Risk/Growth

FBN Securities, Shebly Seyrafi

Strength in the U.S. was “particularly impressive” with revenue up 25% year-over-year despite international revenue slowing to 11% year-over-year. "Health continues to be TWTR’s highest priority, and we applaud the company’s strategy and execution here."

Rates outperform, raises PT $45 from $40

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