NEW YORK (TheStreet) -- At its height, Twitter (TWTR) was priced to take over the world. But, as Nomura analyst Anthony DiClemente sees it, the world doesn't want to communicate in 140 characters or less. In fact, most of the time, it just wants to share pictures with friends on Facebook (FB).
But, since falling more than 58% from its all-time high, hit back in December, Twitter is now cheap for the niche social network that it is, says DiClemente. Twitter's market cap is $19.55 billion -- just a little more than what Facebook paid for messaging service WhatsApp. And he argues that now is the time to buy shares.
DiClemente upgraded Twitter to buy from neutral Wednesday. He kept a $43 price target on the stock. Twitter climbed more than 10% on the news. But the stock still traded at far less than his target -- around $33.70 -- near the end of trading Wednesday. The consensus price target is $45.67, according to stats on the Analyst Ratings Network.
StockTwits users largely agreed with DiClemente Wednesday. Sentiment on Twitter increased 4.6% to 71% bullish, according to site analytics.
$TWTR is still down 45% on the year, theres room to go? A Ward (@alexanderhward) May. 28 at 03:40 PM
Twitter has taken off with journalists, celebrities, authors, marketers, tech-savvy politicians and others who want to communicate with strangers or fans in short bursts -- like that philanthropist in San Francisco who hosts anonymous scavenger hunts for money-filled envelopes.
But it has failed to gain a Facebook-like following among people most interested in communicating with their real-life social network. That's okay, as long as the valuation takes into account that advertisers will see it as a niche network to attract a certain kind of audience. It's not a mass-market social networking play where you can target both Grandma and her grandkids using different filters.
$TWTR actually Nomura's upgrade made a lot of sense if you actually listen to what the analyst said, instead of the loser shorts on here? Tony LaMa (@tonylama) May. 28 at 03:40 PM
But others on StockTwits said that Twitter runs the risk of losing its niche following once the self-promoters on it realize they're tweeting to a choir of rather uninterested fellow self-promoters.
Some said they were short the stock and called for the earnings multiple to fall considerably from 133 times expected 2015 earnings.