BAML analyst Justin Post upped his rating on the stock two notches, to "buy" from "underperform", with a price target of $39 per share, firmly ahead of the Street consensus of $33.11. The change followed a price target reduction from analysts at Cowen & Co., who lowered their estimate by $2 to $25 a share, and from JPMorgan, which trimmed theirs by $1 to $45 a share.
"While Twitter has significantly less time spent per user than Facebook, monetization is also significantly lower than the $25 ARPU Facebook will generate globally in 2018, and $108 in the U.S.," BAML said. "If Twitter can continue to improve engagement and targeting and build out its direct response advertiser base, comps suggest opportunities for significant ARPU increases."
Twitter shares rose 2.6% higher to $33.09 each, a move that extends the stock's three-month gain to around 25% and values the San Francisco, California-based group at $25.5 billion.
Twitter shares have been notably active over the past month, particularly following a note from Citron Research in late December that argued the site's controversial image meant it had become "the Harvey Weinstein of social media."
Citron's Andrew Left put a price target of $20 on the stock, and noted that Amnesty International, a non-governmental organization, has deemed Twitter abusive to human rights and called it "toxic" for women.
"Any form of tweaking of the business model to 'monitor speech' sends traffic, engagement, and total users backwards for Twitter," Left wrote in his note. Plus, "Twitter now not only faces the problem of conservative backlash but more importantly the ad buyer who must be sensitive to all social norms," Left said.