Twitter Inc (NYSE: TWTR) stock jumped more than 6 percent to its highest level in more than three years on Tuesday after J.P. Morgan analyst Doug Anmuth reiterated his bullish outlook for TWTR stock and raised his price target by nearly 30 percent. Anmuth says recent conversations with online advertisers indicate Twitter is finally getting its ducks in a row after years of struggles.
According to Anmuth, large advertisers are starting to recognize Twitter’s unique position in the evolving media landscape.
“We believe Twitter is uniquely positioned as the real-time broadcast and communications network, making it complementary to all other forms of media, including TV,” Anmuth says.
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He says Twitter is also a major beneficiary of advertisers pouring money into both mobile and native advertising.
“Industry conversations suggest the value for advertisers on TWTR is increasing, driven by double-digit [daily average user] growth, improving product for both users and marketers,” Anmuth says.
Last quarter, Twitter reported revenue, earnings and user numbers that exceeded market expectations, and Anmuth expects that momentum to continue throughout 2018. He says the 2018 FIFA World Cup could be a major near-term catalyst for ad sales as well thanks to Twitter’s real-time video highlights partnership with Twenty-First Century Fox ( FOXA).
After a highly-anticipated initial public offering back in 2014, Twitter stock has struggled to gain the type of market traction that social media rival Facebook ( FB) has enjoyed. TWTR stock spent most of 2016 and 2017 trading below its IPO price of $26 per share, dipping into the mid-teens on several occasions.
Twitter struggled to gain advertisers’ confidence and failed to demonstrate consistent growth and profitability to investors, but its past two quarters have Anmuth convinced Twitter has finally gotten it right.
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J.P. Morgan projects Twitter’s cost per engagement will drop 29 percent this year, while advertising revenue growth will accelerate to 27 percent in the second quarter, 29 percent in the third quarter and 21 percent in the fourth quarter. Growth in the second half of the year will be particularly impressive given the more challenging comparisons from last year.
In the longer term, J.P. Morgan projects Twitter will maintain advertising growth of at least 20 percent annually over the next several years.
J.P. Morgan has an “overweight” rating and $50 price target for TWTR stock.
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Believe the Hype: Twitter Inc (TWTR) Stock Is Headed for $50 originally appeared on usnews.com
