Pacific Crest: Twitter CEO Search Should End Late This Year And Boost Shares

In a report issued Tuesday, Pacific Crest analyst Evan Wilson looked into CEO transitions that are comparable to Twitter Inc (NYSE: TWTR)’s and concluded that the search should end by December, which will logically send the stock up.

Why December?

One of the top questions among investors is, “When will Twitter have a permanent CEO?”

Pacific Crest conducted an analysis on eight technology companies that have recently experienced long CEO searches. The average search in this group lasted 180 days, “with a surprisingly tight band a few weeks around this date,” the report assured. “It looks like this is how long it takes to find, negotiate, hire and announce a new CEO,” the experts added.

If history can be used as guide, Twitter investors should expect a new CEO to be announced around December 8, 180 days after Dick Costolo's resignation.

Related Link: Dick Costolo's Farewell Op-Ed

Then, What?

While the stocks’ performance showed no clear trend during the executive search period, the firm’s analysis did show that, in most cases, stocks surged considerably (18 percent, on average) in the 90 days following the announcement of the new CEO. “The quality of the hire (and whether it was an internal or external hire) matters most, but the ‘hope trade’ is clear,” the experts expounded.

So, as Twitter continues to search for a new Chief Executive, speculation grows, and the stock slowly tumbles – down 3.2 percent in the last month and 32.5 percent in the past three.

However, the analysts at Pacific Crest think that the company’s relevance in the technology community (considerably higher than its importance to mainstream consumers) “makes it attractive for someone pursuing a technology CEO role.”

The experts believe Twitter’s “monetization roadmap is fairly clear (closer integration with direct response advertisers on app installs and retargeting),” and they are looking for somebody who can make the company’s value “obvious to mainstream users.”

Pacific Crest maintains an Overweight rating and $52.00 price target on shares of Twitter.

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