Analysts finally weigh in on Twitter

The 25-day quiet period on the stock ends, allowing companies to rate it. The reactions are mixed.

By Benzinga Dec 2, 2013 3:55PM


Credit: © Kacper Pempel/Reuters
Caption: People holding mobile phones are silhouetted against a backdrop on which the Twitter logo is projectedBy Tim Parker


Monday not only means Cyber Monday, it also marks the end of Twitter's (TWTR) 25-day quiet period.


As expected, some of the high-profile underwriters of the IPO issued ratings on the stock in the early morning hours Monday.


During the first 25 days of trading, companies involved in the IPO are not permitted to issue ratings or guidance. Some of those underwriters include JP Morgan Chase, Morgan Stanley, Goldman Sachs, Bank of America and others.


Of those companies, here’s what we know so far:

  • JP Morgan initiated coverage on the stock with a "neutral" rating and a $40 price target implying that at least for now, Twitter’s upside has peaked.
  • Morgan Stanley gave the stock an "equal weight" rating.
  • Deutsche Bank initiated coverage with a "buy" and a $50 price target.
  • Goldman Sachs rated the stock a "buy" and announced a $46 price target.
  • Bank of America was the most critical, initiating coverage with an "underperform" rating and a $36 price target.

That covers all of the major underwriters on the stock and surprisingly, the initiated coverage wasn’t as bullish as the street expected. Twitter closed at $41.57 Friday putting it somewhere in the middle of the various price targets. Only Deutsche Bank sees large-scale upside ahead for the stock.


A Seeking Alpha article pointed out that on the days leading up to the expiration of the quiet period, a stock tends to rise. That was definitely the case last week as the stock rose 6.4 percent -- off its recent lows. This would indicate that positive coverage was priced into the stock but with the new coverage mixed, the stock may experience selloff during Monday’s trading session. In the premarket, the stock is already down about 0.6 percent.


Since Twitter’s hugely successful IPO, the stock has struggled to log any further upside. 

The stock is down about 7.4 percent from the close on its IPO day. While chart patterns have muted validity with such a young stock, early indications show a downward trajectory.


Disclosure: At the time of this writing, Tim Parker had no position in the above mentioned stocks.


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