Axiom Analyst Trims Twitter User Estimates, Cuts Price Target To $40/Share

Axiom Capital cut its forecasts for Twitter Inc (NYSE: TWTR) monthly active users (MAUs), a key metric that indicates Twitter's growth and engagement.

Axiom analyst Victor Anthony now expects MAUs at 302 million, down from a 309 million forecast prior. Anthony notes that the current Wall Street consensus calls for MAUs of 310 million. Alongside that change, the firm also reduced Twitter's multiple, leading the analysts to cut the price target from $45 to $40.

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While Axiom said Twitter should be able to meet Q2 estimates when the company reports earnings, it did caution that "the stock could contract further" if the "core MAU number declines." This MAU number, Anthony argued, will be "top-of-mind" regardless of whether Twitter meets its revenue and monetization targets.

However, further price declines puts Twitter into an interesting position, he said. "Further pressure on the stock will likely only inflate acquisition speculation, which will make the stock a difficult short." The analyst said it's best for investors to stay on the sidelines.

The stock would look attractive at 10x sales, or $33 per share, Anthony added. Twitter last traded near the $35 mark.