Twitter Shares Tumble As Bob Peck Downgrades Ahead Of Earnings

In a report published Monday, SunTrust Robinson Humphrey analyst Bob Peck downgraded Twitter Inc (NYSE: TWTR) to Neutral from Buy with a price target cut to $50 from a previous $58.

Shares of Twitter were trading lower by more than 1.4 percent early in Monday's pre-market session as Peck noted that the sentiment heading into Tuesday's first quarter earnings print is "equally divided."

Looking forward to the quarterly report, Peck highlighted four positive and negative themes that investors have highlighted.

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The Positives:

• Twitter is likely to report a strong first quarter and is "iterating" fast on new products and innovation.
• The opportunity to convert non-logged in users is "large."
• The recent search deal agreement with Google Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) should drive more exposure and usage.
• Twitter has "multiple avenues and opportunities" for new monetization.

The Negatives:

• Monthly net add guidance for the second quarter may suggest a deceleration in the metric.
• Monetization levels are closer to Facebook Inc (NASDAQ: FB) than most realize.
• Tweets per day stats are showing a decline and investors may not have other metrics to gauge the business.
• Non-Compliant Terms of Service users being monetized may "suppress" advertiser growth in the short and mid-term.

Peck's Final Words:

"While we are big believers in the long-term opportunity in front of Twitter and believe the company will report a strong Q1, we are lowering our rating to Neutral as we think the negative risks create enough concern and likely result in a range-bound stock in the near term," Peck wrote.