Twitter Inc. shares /zigman2/quotes/203180645/composite TWTR +0.43% are off 1.1% in Thursday trading after a number of prominent accounts were breached a day earlier to send out messages pertaining to a bitcoin scam. Stifel analyst John Egbert said that the hack could "create a lengthy overhang on the stock" amid a more thorough investigation into the company's practices. "The breach, which appears to be Twitter's fault rather than the account owners', will likely lead to regulatory scrutiny and the need for incremental investment into the company's security infrastructure and protocols," Egbert wrote in a note to clients. The implications are "extremely troubling," he said, as past hacks have been less sophisticated or the result of users falling victim to scams. "Yesterday's hack shows account-level security protocols like two-factor authentication do little to prevent a breach coming from inside of the company," Egbert wrote. He has a hold rating and $26 target on the stock, which is up 33% over the past three months as the S&P 500 /zigman2/quotes/210599714/realtime SPX +1.40% has risen 15%.
An earlier version of this report incorrectly identified the lead Stifel analyst who issued a Thursday report on Twitter. He is John Egbert.