Twitter Inc (NYSE:TWTR) has received yet another upgrade, this time from Pivotal Research Group. Shares of the microblogging company have declined more than 46% this year so far amid user growth concerns. But some analysts who believe in its business model see it as a buying opportunity. After last week’s upgrade by Morgan Stanley, Pivotal Research Group analyst Brian Weiser has upgraded Twitter from Sell to Hold. However, Pivotal maintained its price target at $34.

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Twitter’s current valuation seems fair

Weiser says Twitter Inc (NYSE:TWTR) is a powerful medium, but it’s unlikely to appeal to everyone in its current form. That’s absolutely fine. The San Francisco-based company avoids the commoditization because things that give it a niche appeal are the same things that make it a distinct vehicle for various types of marketers. Pivotal Research Group says that Twitter’s current valuation seems fair. But volatility in the stock and investors’ heavy emphasis on user growth may pull the stock further down.

The research firm forecasts Twitter Inc (NYSE:TWTR)’s revenues to reach $5 billion by 2018, driven by an increase in the share of digital media spending. Pivotal estimates that Twitter will attract 2.5% of total digital ad spending by 2018, up from about 1% (excluding China) in 2014. Brian Weiser says the microblogging company will produce, relative to Facebook Inc (NASDAQ:FB), 50% potential ad units with one-third of audience.

Pivotal justifies its ‘Hold’ rating on Twitter

Pivotal Research Group said the key reason behind its Hold rating on the stock is that a large number of investors focus unduly on slowing user growth. Twitter Inc (NYSE:TWTR) ended the first quarter with 255 million monthly active users, showing just 6% QoQ growth. But investors’ focus on user growth is a consequence of the company’s own emphasis on user growth. In contrast, Brian Weiser argues that the San Francisco-based company has several ways to capture ad budget share that go way beyond the number of users. Especially when Twitter enjoys 100% market share in a niche, but powerful marketing solution (microblogging).

Twitter Inc (NYSE:TWTR) shares fell 1.92% to $32.22 at 1:47 PM EDT on Thursday.