"While TWTR is the best Internet platform for real-time content discovery, we believe the stock's current valuation of 10x 2015E sales, a 52% premium to peers, fully reflects future prospects based on current growth rates," Oppenheimer said.
Specifically, recent results suggest the current incarnation of the product may not have the mass-market appeal of other social networks, analysts noted.
As a result, Oppenheimer said it would need to see monthly active users accelerate to become positive on the stock, based on planned product changes, or an indication that Twitter can monetize its 500 million "logged-off" users.
Separately, Twitter recently started to sell advertising in Russia, shrugging off regulatory hurdles and a slowing economy as part of a push to add revenue outside the U.S., Bloomberg reports.
TheStreet Ratings team rates TWITTER INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate TWITTER INC (TWTR) a SELL. This is driven by several weaknesses, 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 generally deteriorating net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 171.6% when compared to the same quarter one year ago, falling from -$64.60 million to -$175.46 million.
- TWITTER INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This year, the market expects an improvement in earnings ($0.10 versus -$1.05).
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 29.89%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 141.66% compared to the year-earlier quarter.
- Despite currently having a low debt-to-equity ratio of 0.43, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 8.98 is very high and demonstrates very strong liquidity.
- Compared to other companies in the Internet Software & Services industry and the overall market, TWITTER INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: TWTR Ratings Report