Twitter Inc (NYSE:TWTR) has been doing anything but pleasing investors. Analysts had been wary about the company’s stock because of the high valuation, but now that shares have begun to fall back down to Earth, many are changing their tune. Morgan Stanley analysts upgraded Twitter on Thursday, and on Friday analysts at Bank of America upgraded the micro-blogging company.
Twitter moves to Neutral
The analyst team upgraded Twitter Inc (NYSE:TWTR) from Underperform to Neutral and set a $36 per share price target on the company. Bank of America’s price target suggests a more than 12% upside to Twitter stock. They note that risks remain, particularly in user growth, which is the one spot investors have been the most concerned about. They also see potential upside in monetization compared to estimates because of the low ad loads on Twitter right now and also the micro-blogging company’s new advertising products.
The Bank of America team also noted that user growth had improved, even though it wasn’t as much as they would have liked. They also pointed to cosmetic changes Twitter Inc (NYSE:TWTR) has made to its user interface. The changes do make it look more like Facebook Inc (NASDAQ:FB), and analysts from more than one firm has suggested that the change could be a key step toward bringing Twitter from a niche platform into mainstream use.
Twitter survives second lockup expiration, but just barely
The upgrades from both firms come at a key time in Twitter Inc (NYSE:TWTR)’s life as a public company. Shares began to plummet starting on Tuesday as hundreds of millions of insider-owned shares unlocked for trading and insiders began to sell. The stock does seem to have stabilized, however, possibly because analysts are starting to become more constructive on the company’s valuation.
In spite of how low Twitter Inc (NYSE:TWTR) has fallen so far this year, the company still trades at a premium multiple compared to its peers. Its multiple is 18 times price to 2014 sales. Facebook Inc (NASDAQ:FB)’s multiple, on the other hand, is about 17 times, while LinkedIn Corp (NYSE:LNKD)’s is 16 times.