Twitter (TWTR) Stock Lower, SunTrust Issues Rating Downgrade

Twitter's (TWTR) stock rating was lowered this morning to 'neutral' from 'buy' at SunTrust, as the company continues to struggle with user growth and monetization.
By Natalie Walters ,

NEW YORK (TheStreet) -- Shares of Twitter (TWTR) - Get Report are down by 2.85% to $17.57 in early-morning trading on Monday, as SunTrustRobinson Humphrey downgraded its rating on the company to "neutral" from "buy," with a price target of $18. 

The firm's research on Twitter's second quarter fiscal earnings, which will be reported after the market closes on July 26, show that the San Francisco-based social networking service continues to struggle with user growth and engagement, as well as monetization. 

The lowered engagement isn't just from both old and new users and "increasing monetization can only go so far, with limited new product introductions, increasing competition, and a challenging advertising background," SunTrust said in a note.

While Twitter has rolled out a number of new products, such as logged-off users, Periscope, TellApart, and Moments, they haven't had a significant impact on the company yet, according to SunTrust. 

But the firm is hopeful about the potential of these services. "We remain optimistic about the long-term potential of these and other new initiatives, but will need to see more evidence to get constructive at these levels," SunTrust added.  

Separately, 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. TheStreet Ratings has this to say about the recommendation:

We rate TWITTER INC 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.

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