Twitter Inc (NYSE:TWTR) stock received a boost of more than 4% in pre-market trading after a positive early morning report from Goldman Sachs. Analyst Heath P. Terry and his team say despite the recent run-up in Twitter’s share price, they remain Buy-rated because they believe the micro-blogging site is speeding up the pace at which it innovates and creates new products or enhancements for old products.
The Goldman Sachs team also gave their price target for Twitter a nice boost this morning, increasing it from $46 to $65 per share.
Twitter price target, estimates raised
They said during the fourth quarter alone, Twitter Inc (NYSE:TWTR) launched 23 different product enhancements covering direct messaging, trending television discovery, photos and multiple timelines. The analysts note that this is almost four times the number of product enhancements Twitter has launched in previous quarters. They also say that while the company’s advertising products are still in their early stages, innovations in keyword targeting, retargeting and broad match targeting will likely drive incremental improvements in monetization.
The Goldman Sachs team increased their revenue and earnings per share estimates for 2013 to 2015 based on this faster innovation pace. They now estimate that Twitter lost $3.35 per share for the 2013 fiscal year, compared to their previous estimate of a loss of $3.37 per share. For revenue, they’re now estimating $634.6 million for 2013, compared to their previous estimate of $623.2 million. For 2014, they’re estimating $1.075 billion in revenue, compared to their previous estimate of $980.3 million. In losses per share for 2014, they believe Twitter will report 70 cents per share, compared to their previous estimated losses of 71 cents per share.
Goldman Sachs bucks the trend on Twitter
The report from Goldman bucks the recent trend seen by investment firms, several of which have downgraded Twitter Inc (NYSE:TWTR) because they believe it is overvalued. The recent rash of downgrades has sent shares into a downward spiral, although shares were lifted a bit briefly on Friday after reports of new experiments being run by the company.
The company will report its first quarterly earnings as a public company on Feb. 5.