Cantor Fitzgerald Previews Twitter's Q4, Expects 'Solid' Results

Youssef Squali of Cantor Fitzgerald on Monday previewed Twitter Inc's (NYSE: TWTR) upcoming fourth-quarter results which will be reported on Thursday.

Squali expects Twitter to report revenue of $463.3 million, slightly above the consensus estimate of $454.0 million and above management's guidance of $440 million to $450 million. EBITDA is estimated at $106.8 million, in-line with the consensus estimate of $107.0 million but above management's guidance of $100 million to $105 million.

“Twitter should continue to benefit from a surge in mobile, as advertisers shift their budgets in response to changing user behavior, while users (monthly active users) and engagement remain under the microscope,” Squali wrote. “Monetization should continue to drive near-term results, but solid sequential growth in users and higher engagement will be key to drive the stock higher from here, in our view.”

Squali expects ad revenue to total $428.5 million, a growth of 95.1 percent from a year ago, representing a deceleration from the third quarter's 108.7 percent year-over-year gain. The analyst expects Twitter to continue demonstrated growth in ad revenue by 94 percent through 2015 and beyond at a 55 percent five-year compounded annual growth rate.

Squali estimates Twitter's monthly active user base will show a 22.7 percent gain from a year ago and total 296 million, implying 12 million new users in the quarter.

Finally, Squali concludes by stating that Facebook Inc's (NASDAQ: FB) strong quarter in which mobile was a key driver is a positive read-through heading into Twitter's results.

Shares are Buy rated with a $58 price target.