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WallachBeth lowers their Arena Pharmaceuticals, Inc.(NASDAQ:ARNA) tgt to $4 from $6 noting co announced a cost reduction plan to cut its US workforce by about 35% or 80 employees. It est’d that reduction would lower cash burn by about $11 mil annually. Arena also intended to reduce costs at its Swiss manufacturing facility. Firm views the expense reduction positively.
ROTH Capital initiates MEET with a Buy and price target of $4. Firm believes co’s social discovery business is hitting an inflection point, driven by ~30% y/y mobile user growth (1H15), lending itself to robust mobile ad sales, and with it, substantial incremental Adj. EBITDA margins (~50%+). With further catalysts for growth (video ad and native ad units) being rolled out, firm believes the market is just starting to appreciate cos’ true cash flow potential.
Twitter Inc(NYSE:TWTR): Axiom Capital notes revenue was 1% ahead of estimate while Adj. EBITDA was 20% ahead of estimate, although management stated that certain costs in 3Q were pushed into 4Q. Core MAUs of 307M were in-line with estimate, as were the total MAUs of 320M, incl. SMS. The mid-point of 4Q revenue guidance was 5% below consensus (reasons were vague, although firm suspects slower O&O growth) while Adj. EBITDA at the mid-point was 17% below consensus, reflective of the lower revenue guide, cost shifts from 3Q and increased marketing spend. Believes tools are now in place that should support share price appreciation over the coming year. An investment in TWTR today is a bet that management can execute. Firm’s early October upgrade to Buy from Hold at the share price lows was predicated on this belief, which it continues to hold.
Stifel Research notes it has been long-time critics of Twitter, the strategy and the stock, until today. Firm believes the hiring of Jack Dorsey was the first step toward an improved product and repaired franchise. Twitter faces declining expectations and easing comps as it approaches 2016, which should be a perfect backdrop for a product-focused founder to look like a savior. Twitter shares are priced at ~$27 in aftermarket trading for a stock that carries a 12-month bull case into the $40s and a bear case of low-$20s, leaving a quite favorable risk-reward proposition for investors. Firm upgrades Twitter shares to Buy from Hold and establish a $34 Price Target.
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