SunTrust’s Bob Peck is out this morning with a reiteration of his $50 price target and buy rec on Twitter shares, which will be IPOing on Thursday.
As for investors who will not be getting access to the stock at the IPO price (23-25), Peck says the following:
We believe the Twitter IPO presents a sound investment at expected levels and think the stock could reach $50 by the end of 2014. We reiterate our Buy recommendation…
Buying the IPO. Further, since many investors will not able to buy at the IPO price, we have been asked at what levels should investors invest. We think that investors can feel comfortable buying up to $40, which would still provide a 20% IRR to our $50 target. Our target is based on a 17x multiple of ~$2b revenues in 2015. Current comparisons to other high growth Internet companies trade in a range from 17-20x revenues. Further, investors should be aware that near term movement in the stock price may be more driven by the supply / demand characteristics then pure fundamentals.
Peck was the first Wall Street analyst to have coverage of the pre-IPO company, there are now four other investment banks with buy recs (0 neutrals, 0 sells).
I’ve got some indications of interest around The Street but am operating under the assumption that I won’t get much – if any – at the IPO price. My personal strategy, which I don’t recommend to anyone else, is laid out in an article I wrote for Fortune Magazine here.