Twitter (TWTR) Climbs On Upgrade

Twitter Inc (NYSE: TWTR)

Twitter is having a great day in the market today after shares of the company were upgraded by SunTrust Robinson Humphrey. Today, we’ll talk about why the analyst decided to upgrade the stock, how the market reacted, and what we can expect to see moving forward.

SunTrust Robinson Humphrey Upgrades TWTR

As mentioned above, Twitter investors got great news today from SunTrust Robinson Humphrey. The firm upgraded the stock from a “Neutral” rating to a “Buy” rating, ultimately increasing the stock’s target price to $38. In the research report, analyst Robert Peck of SunTrust stated that sentiment is low and a catalyst is coming soon. Here’s what Peck had to say…

We are upgrading TWTR to Buy from Neutral. Given sentiment has washed out (stock down ~50% from 1Q’15-end), a series of positive catalysts, and attractive valuation with a strategic floor, we are cautiously optimistic… Our upgrade is predicted on a quick mgmt. clarification (likely ~Labor Day) and execution. Importantly, we believe the 2nd derivative is now positive (i.e. more upside potential than down). While TWTR has near term challenges and our ests are inline with St., we think user metrics have at least stabilized and can grow from the below catalysts…”

How The Market Reacted To The News

As mentioned above, Twitter is having an incredible day in the market today. Following the analyst upgrade, investors have become incredibly excited about what is ahead for the company. Currently (12:51), TWTR is trading at $28.31 per share after a gain of 5.52% so far today.

What We Can Expect To See Moving Forward

While Robert Peck seemed to be incredibly optimistic about the stock, I’m not so convinced. Granted, the valuation is incredible at the moment, but there’s still the management shuffle that needs to come to an end. Ultimately, Twitter needs to solidify the CEO role within the company before I can make any solid predictions as to what to expect moving forward.

Nonetheless, the overall consensus at the moment is that Dorsey will take the reigns as permanent CEO of the company. Personally, I’m a huge fan of this idea. The reality is that Dorsey was one of the founding members; he helped to bring the company where it is today. Therefore, I have no doubt that he will be able to push the needle with regard to users. Also, if you’ve searched breaking news on Google lately, you’ll see that Twitter is finally a big part of results which is likely to play a key role in solving the user issue.

With all of that said, I have a slightly positive opinion of the stock at the moment. I wouldn’t go throwing my life’s savings at it, but it is compelling to say the least. I will be watching closely however. After all, if TWTR does announce that Dorsey is taking the role as permanent CEO of Twitter, the stock is likely to explode. So, this is definitely one to watch, but if you plan to move now, move with caution; there’s still quite a bit that’s up in the air.

What Do You Think?

Where do you think TWTR is headed and why? Let us know in the comments below!

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