- Now officially linked in to wide-ranging speculation about who might buy Twitter (TWTR -3.2%): AT&T (T -1.5%).
- A purchase by AT&T could make sense, Mizuho's Neil Doshi writes, but he thinks Twitter's valuation is such that an acquisition doesn't really add up for anybody. He's downgraded TWTR to Underperform, with a price target of $15 (Twitter shares closed today at $22.96).
- If not great fits, the best fits for a Twitter purchase are Salesforce (NYSE:CRM), Alphabet (GOOG, GOOGL) and AT&T, "but that is about it" and "only Alphabet makes sense from a strategic perspective."
- Fundamentals at Twitter have "deteriorated significantly" over the past year, Doshi says. Verizon's paying about six times EV/EBITDA for the core of Yahoo (growing almost as fast as Twitter in many respects), while Twitter trades near a multiple of 16. Microsoft is buying LinkedIn for 20 times, though LinkedIn is growing much faster than Twitter.
- Meanwhile, Nomura reiterated a Neutral rating on Twitter and price target of $13, while Loop Capital downgraded to Sell from Hold, with a price target of $18.