Shares of Twitter (TWTR - Free Report) surged to hit a new 52-week high on Monday morning after JPMorgan Chase (JPM - Free Report) analysts upgraded the once-struggling social media stock.
JPMorgan’s Doug Anmuth upped his Twitter rating from “Hold” to “Overweight” in a note to clients on Monday. The analyst also upped Twitter’s price target from $20 per share to $27 per share. The new price target represents about a 20% upside over the next 12 months based on Friday's closing price.
Anmuth also called Twitter one of his top small- to mid-cap picks for 2018, pointing to the company’s ability to create a different and new “value proposition.” He thinks Twitter should become "GAAP profitable" in 2018.
"We believe both the TWTR story and financial results will strengthen over the next year as the company continues to build on its differentiated value proposition for users & returns to revenue growth," Anmuth wrote.
The analyst highlighted a few major reasons for the upgrade. First, Anmuth noted that he believes Twitter will be able to improve and leverage video and live streaming. The JPMorgan analyst expects the social media company will also be able to grow its daily active user base by 10%, which Anmuth projects could lead to an 8% jump in advertising revenue.
"We recognize that TWTR shares are up 30 percent since 3Q earnings in late October and are not cheap at 11.8x 2019E EBITDA on our revised numbers," Anmuth wrote.
"But we believe increasing traction with both users and advertisers will drive upside to 2018 consensus (we are 4 percent above on revenue & 15 percent on EBITDA) and investor sentiment around TWTR remains mixed."
Twitter also drew investor attention on Monday after the company officially put into place its new policy that addresses hateful symbols and images. The company, which had previously cautioned on the side of nearly complete free speech, said it would start to put warnings in front of hateful images.
Shares of Twitter jumped over 9% on Monday morning to hit a new 52-week intraday trading high of $24.170 per share. Before today’s gains, shares of Twitter had climbed 26.45% over the last 12-weeks alone.
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