Shares of Twitter ( TWTR ) reached a new buy point Monday as it received new coverage and a buy rating from a financial services firm, saying Twitter usage and advertising are moving in the right direction.
[ibd-display-video id=3031027 width=50 float=left autostart=true] Summit Redstone Partners analyst Jonathan Kees, in issuing a buy rating on Twitter, wrote that the social media outlet has become an integrated and almost ingrained part of society and everyday life.
“We believe that now is the time to jump in as user growth and engagement traffic have stabilized and even started growing,” Kees wrote in a research note to clients. He set a price target on Twitter of 26.
Twitter shares jumped nearly 11%, near 24.70, during afternoon trading on the stock market today . Twitter also surpassed a 22.58 buy point after its initial buy point of 20.98, reached in late October, failed. The company is trading near its highest level in 16 months.
“We understand that the stock has had periods of underperformance but believe the market may not be giving enough credit to Twitter’s performance trends and turnaround,” Kees went on to say. He also said Twitter’s “relatively modest valuation provides sufficient reward/risk profile for coming in early on this speculative investment.”
Twitter is in the midst of reorganizing, aiming to reverse revenue and user deceleration. The company has revamped its product, rolled out video applications, added more content and improved analytics as it reorganizes the sales force. Last month, Twitter doubled the size of its tweets to 280 characters.
IBD’S TAKE: On Friday Twitter reached an important technical milestone , with its Relative Strength Rating entering into the 90-plus percentile. The best-performing stocks typically have an RS Rating north of 80 as they begin their largest runs.
In October, Twitter reported better-than-expected third-quarter results and indicated it might turn an adjusted profit in the fourth quarter. Monthly average users were 330 million, about in line with estimates, up by four million from the prior quarter. Revenue growth was fueled by better sales execution, with strength in video, data and enterprise solutions, analysts said.
Kees said the turnaround at Twitter is becoming more evident.
“Twitter’s user growth has been showing signs of recovery, with a re-acceleration in daily active users and a sequential increase in monthly users. Product changes, streaming, and content have driven Twitter’s audience engagement,” he wrote.
Twitter Shares Catapult As Analysts Raise Price Targets
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