(Bloomberg) -- Twitter Inc. shares fell as much as 4.6% on Thursday, after MoffettNathanson affirmed its sell rating on the social media company and slashed its price target to the lowest on the Street.
The firm cited Twitter's “extreme valuation,” and the risk that it could give a weak third-quarter outlook when it reports its results next month. The target was cut to $25 from $28.
“Now seems to be an especially opportune time to sell Twitter,” given it is facing “difficult” comparisons in the third quarter, analyst Michael Nathanson wrote to clients. He added that “as revenue growth is set to decelerate, cost growth is also expected to ramp,” and those trends “could be a burden on Twitter for years to come.”
Shares of Twitter are up more than 35% from a December low, giving it a valuation that's “as stretched as ever,” Nathanson wrote.
Twitter is scheduled to report second-quarter results on July 26. Analysts are expecting it to report adjusted earnings of 19 cents a share on revenue of $829.3 million.
Currently, 12 analysts recommend buying the stock while 24 recommend holding it and six have sell ratings. The average price target of $39 implies upside of a little more than 9%.
To contact the reporter on this story: Ryan Vlastelica in New York at rvlastelica1@bloomberg.net
To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Scott Schnipper
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