Twitter Inc.’s stock price has climbed at a torrid pace to date this year, however the social media giant’s steady rise borders on the extreme and shares may begin to falter, says Brian Wieser, senior research analyst at Pivotal Research Group in New York.
“The stock has risen 47% previously three months and we think it is time for you to take money from the table as the market momentum which has driven the stock towards what we should consider fair value could equally well reverse itself,” he explained in a note to clients.
Mr. Weiser reduced his rating around the stock to carry from buy, while keeping a price target of US$51 per share that is representative of zero upside from Twitter’s current trading price.
The analyst said the 6% gain in the stock after Twitter announced that it is launching auto-play video ads “seemed somewhat extreme” because it should curently have been a part of estimates.
“Other positive news could, obviously, bring the stock yet higher in the near-term, and we remain believing that Twitter maintains long-term value for investors with extended time horizons,” he explained.
“Still, given the venture stage company-like nature of Twitter\’s business and the associated volatility that is exhibited through the stock, we would rather wait and see tangible factors emerge which would help justify a high enough price target to warrant a Buy rating in a future point in time.”