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Analyst Maintains Buy on Twitter Inc (TWTR) Despite 100 Days Without CEO

By Howard Kim

It’s been over 100 days since Dick Costolo resigned as the CEO of Twitter Inc (NYSE:TWTR). On September 21st, Robert Peck of SunTrust Robinson Humphrey shared his comments for the company. Despite the lack of current and stable CEO, Peck maintained a Buy rating on Twitter with a$38 price target.

Peck said, “Several weeks back, we thought the CEO search was finally coming to an end and that a decision was imminent – we were wrong.” He added, “We are stunned that we have now passed over 100 days since the announcement of the former CEO’s resignation, particularly since the board had discussions with him about stepping down since Dec. 2014. Feedback we hear from investors is that the process has taken too long.”

The analyst said investors want to know from the board why the process is taking so long. According to Peck, Jack Dorsey, Co-founder of Twitter, seems to be the most logical choice for the post, given that there don’t seem be any superior “external candidates” in the pipeline.

In the context of Dorsey, Peck had the following observations: “We think this is less of an issue for several reasons:

1) Mr. Dorsey is seen as a leader and is well respected inside and outside of Twitter;

2) He has been running the company since July and we’ve already seen his fingerprints in faster product rollout (Commerce via DM, instant articles, etc.);

3) We think some senior execs would only work for him vs an outsider; and

4) We think Mr. Dorsey as CEO is expected and supported by shareholders at this point.”

The analyst expects the board to be rejigged upon the establishment of the new CEO. Some reasons behind this are the long CEO search process, sudden departure of the earlier CEO, and initial delays in roll out of new products. Peck said, “Based on this, we think 2 of the 8 board members, are more likely to move on: Peter Currie (leading the CEO search, low ownership & activity) and Marjorie Scardino (low ownership & activity). We would look for the company to put more expertise on the board in media, tech, and operations.”

Robert Peck has rated Twitter 37 times since 2013, earning an 85% success rate recommending the stock with a +36.5% average return per TWTR rating.