KeyBanc Downgrades Twitter to Sector Weight From Overweight
1:13 PM ET, 04/14/2022 - MT Newswires
01:13 PM EDT, 04/14/2022 (MT Newswires) -- KeyBanc downgraded Twitter (TWTR) to sector weight from overweight on the likelihood that Musk's bid for the company will "go up in smoke" and leave challenging fundamentals to weigh on the stock.
The brokerage finds it hard to believe the company's Board will accept Musk's unsolicited offer to acquire the company for $54.20 per share (around 38% premium prior to where shares closed on April 1) given the shares trading at around $73 last year.
"Rejecting the offer risks losing Mr. Musk as a shareholder and potentially receiving more criticism of the product at a time in which the macro environment elevates risk to ad models," KeyBanc said in a note to clients Thursday.
The company's shares have risen more than 17% since Elon Musk declared his stake in the company on April 4, vs. -4% for the NASDAQ and -2% for the average large cap ad stock.
The brokerage lowered its 2022 and 2023 revenue estimates by 2% each to $5.82 billion and $7.11 billion, respectively, as the macro environment creates a more challenging backdrop.
Twitter (TWTR) has an average rating of Hold and price targets ranging from $30 to $60.40, according to analysts polled by Capital IQ.
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