Wunderlich Maintains on Twitter, Notes Slow User Metrics And Valuation

In a report published Thursday, Wunderlich Securities Blake Harper maintained a Sell on Twitter (NYSE: TWTR) and raised the price target from $34.00 to $38.00 following fourth quarter results.

Twitter reported fourth quarter EPS of $0.02 versus the estimated ($0.02). Revenue came in at $242.70 million versus the Street's $217.78 million estimate and Wunderlich's $211.00 estimate. The company's GAAP results were lower due to the stock compensation expense of over $500.00 million.

Despite the company's overall strong numbers, Harper noted Twitter's "valuation, slowing MAUs, and imminent large lock-up expirations." The analyst commented on the company's challenges to acquire the reach of mobile advertising competitors. In addition, Twitter's Timeline views per MAU declined mainly due to product enhancements.

Wunderlich raised estimates and the price target to better reflect higher ad revenue per timeline. Harper reported that the stock remains overvalued with the company's slower user metrics and current valuation. The analyst wrote, "We believe the company has a lot of work to do to justify mass appeal, which appears to be prematurely priced in."

Shares of Twitter closed at $65.97 and is currently down 21.54% at $51.76.