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Twitter Upgraded to Buy, Price Target Hiked by MKM Partners

Twitter is expected to reverse headwinds it faced last year in 2021, an MKM Partners analyst says.
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Twitter  (TWTR) - Get Twitter Inc. Report faced several headwinds during 2020, but they will likely reverse this year, according to an MKM Partners analyst, who upgraded the micro-blogging website to buy from neutral and raised his price target to $60 per share from $47.

Shares of the San Francisco-based company were up 2.02% to $47.95 Wednesday in pre-market trading.

Analyst Rohit Kulkarni said in a note to investors that he believes sentiment toward Twitter shares has been quite negative as the company’s execution "has been somewhat spotty." 

In addition, the analyst said, recent news and corporate actions around President Donald Trump have likely soured investor sentiment a bit further.

Twitter permanently suspended Trump's personal and political accounts on Friday, citing concerns that Trump's accounts could be used to incite more violence following last week's attack on the Capitol by the president's supporters.

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The U.S. House of Representatives is scheduled to vote Wednesday on impeaching the president in response to the attack that left five people dead, including a Capitol Police officer.

"During 2020, Twitter experienced several headwinds due to the pandemic, social unrests (BLM protests), voluntary rejection of political ad spend, and internal/execution issues (delayed product launch)," Kulkarni wrote. "During 2021, we expect these headwinds to reverse."

As 2021 progresses, the analyst continued, "we believe Twitter will have the greatest incremental benefit (vs. its social media peers) as brand advertisers accelerate ad spend and live events and product launches resume their normal cadence."

Kulkarni added that "aided by easier comps and growing focus on monetization, we believe Twitter would have improving fundamentals as the year progresses i.e. revenue growth acceleration and possibly, improving margins."

Separately on Wednesday, Oppenheimer analysts raised their price target on Twitter to $58 from $55 per share, while maintaining outperform rating. The analysts expect an upside to fourth-quarter mDAU--Twitter's measurement of platform performance--from the U.S. elections. 

And on Tuesday, Wells Fargo analyst Brian Fitzgerald lowered his price target on Twitter to $43 from $47, while keeping an Equal Weight rating on the shares, saying that Trump was a "unique animating force for activity and engagement on the platform that will not be easily replaced."