Pro Analysis

Evercore lowers its earnings outlook for Twitter on executive departures, hacking risk

Kacper Pempel | Reuters

Evercore ISI on Thursday lowered its fourth-quarter and full-year earnings estimates for Twitter, predicting a drop in revenue due to lower advertising sales, which could put a ceiling on the social media stock in 2017.

Ahead of Twitter's earnings report in early February, the investment bank lowered its quarterly revenue estimate by 2 percent to $738 million, implying a 4 percent drop from the same period a year ago. Similarly, adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) for the quarter was lowered by 3 percent to $170 million, implying a decrease of 11 percent from a year ago.

Evercore also predicts earnings figures in 2017 will be lower than expected.

"The 2017 reductions stem not only from softer ad check and traffic trends but also from executional worries given Twitter's ongoing restructuring against the backdrop of continued executive departures and hacking incidents," equity analyst Ken Sena wrote in a research note.