M&A for Twitter (TWTR) May Be 'Inevitable in 2017' SunTrust's Peck Tells CNBC

Bob Peck, internet analyst at SunTrist Financial, joined CNBC'S "Squawk on the Street" to comment further on the Twitter (TWTR) downgrade.
By Giovanni Bruno ,

NEW YORK (TheStreet) --Twitter  (TWTR) - Get Report  was downgraded to "neutral" from 'buy' at SunTrust Robinson Humphrey on Monday. SunTrust's internet analyst Bob Peck joined CNBC'S "Squawk on the Street" to comment further on the downgrade.

"It's had a great run, 30% over the past month, and we don't think M&A is likely in 2016, however it may be inevitable in 2017 depending on how the trends go. When looking at the data, currently we can see their still challenged on users, and engagement. People are hoping for a lot of catalysts in the second half of the year," Peck explained.

That being said, Twitter stock is currently up, however this still won't necessarily equate to an M&A in 2016.

"I think it's still an intriguing asset. It is your best real-time search engine out there, it's also your news source so its great place to go. There's a few names that make sense, Apple (AAPL), Google (GOOGL), Facebook (FB). So it could happen, but with a new board and a new CEO, I think if there is M&A it will be after this year," Peck said.

In terms of failing to meet expectations, "We were looking for an uptick in users, uptick in engagement, and people using the platform more. From the data we see none of that has worked yet. Now they still have some things they're doing in the back half of the year, more periscope, and streaming live events, but as of yesterday were not seeing inflection yet," Peck added.

As for expectations for the second quarter, "Notice we didn't take our target, $18, down we thought the stock was fairly priced but we couldn't justify taking the target up further," Peck said, adding rebound is expected for the third and fourth quarters.

Shares of Twitter are trading lower by 2.46% to $17.64  Monday afternoon.

(Twitter is a part of Jim Cramer's charitable trust portfolio Action Alerts PLUS. See all of Cramer's holdings with a free trial).

Separately, TheStreet Ratings rates Twitter as a "Sell" with a ratings score of "D." This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

You can view the full analysis from the report here: TWTR

Loading ...