Topeka Capital After Permanent CEO Announcement

Topeka Capital Upgraded Twitter Stock To Buy Followed By CEO Announcement

On Monday, Twitter Inc. announced that it was making Jack Dorsey from interim Chief Executive Officer to permanent CEO. He took charge of the position after Dick Costolo former CEO resigned earlier in June this year. The management of the company said that it was taking into consideration Global Revenue and Partnership President, Adam Bain to the Chief Operating Officer post.
After the announcement was made, Twitter stock was upgraded to Buy from Hold by Topeka Capital while reiterating a price target of $35. The bullish outlook of the firm is on the basis of the latest CEO’s capabilities to speed up the product innovation pace and attract latest talent in marketing, production and valuation.
Analysts at Topeka also positively see promotion of Adam Bain’sas Chief Operating Officer and sees him as a support to new CEO Jack Dorsey in running both Square Inc. and Twitter as CEO. They also added that however the Twitter management was planningto extend itsbusiness, the capacity to establish a robust e-commerce infrastructure is expected to take few years.
The analysts stated, “We would expect further product updates, especially Project Lightning, to spur user growth.If the company is able to achieve some success with its product updates, we believe it should be worth significantly more than the current 5.0x EV/Sales, 18.5x EV/EBITDA and 41.0x P/E on our 2016 estimates.”
Presently, the social media giant is not finding it easy to increase its monthly active user’s number and monetize them effectively. These issues have caused the stock price to go down by 22.7% this year. Increasing pressure from investors has led to ultimate dismissal of Mr. Costolo as the Chief Executive,, who also announced that he might be leaving the board too.
Chris Saaca, well known bull and investor of Twitter wrote in a blog post that there are a lot of ideas on how to bring a chance in company’s miserable state of affairs. He added that the company does not lack in vision. He also supported Mr. Dorsey for the position of CEO, reiterating his optimism in the ability to carry out and operate both Square and Twitter simultaneously.
However Jack Dorsey appears to be a capable candidate, keeping in mind his past experience plus previous spell as CEO to lead a change at the company, shareholder sentiment will eventually be attached to enhancement in user growth and his execution.
Twitter stock analysis reveals that the stock was up 1.56% to 28.05 at market close on Tuesday.