Twitter Inc (TWTR) Upgraded To Outperform By FBN

Twitter Inc (NYSE:TWTR) stock may be starting to settle down after the shock that was the company’s earnings report earlier this week. Analysts from multiple firms have been increasing their estimates and / or upgrading Twitter stock in the wake of that report. This time FBN Securities analyst Shebly Seyrafi upgraded Twitter from Sector Perform to Outperform and increased their price target from $50 to $60 per share.

Twitter Inc (NYSE:TWTR) posts solid beats

In a report dated July 30, 2014, Shebly noted that Twitter posted a strong revenue beat for the second quarter, coming in at $312 million, compared to the consensus estimate of $283 million. Ad revenue increased 129% year over year due to monthly active user growth that increased 24%, which was better than expected.

Twitter reported 16 million net adds, resulting in total monthly active users of 271 million in the quarter, which was higher than estimates of 267 million and an acceleration from the 14 million net ad in the previous quarter. Shebly says these numbers show that Twitter is so far succeeding in improving user growth, which had been the main crux of investor disappointment in the previous couple of quarters.

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Twitter Inc (NYSE:TWTR) grows monetization

The analyst was also impressed by Twitter’s growth in monetization. He listed several numbers that demonstrate the micro-blogging platform’s strong improvement. For example, average revenue per user increased 84% year over year. Also Twitter saw its ad revenue per thousand Timeline views double, thus upping its monetization rate significantly. In fact, he notes that this metric has accelerated in each of the past five quarters.

In addition, international average revenue per thousand Timeline views grew 149% and Shebly says there’s plenty of room to run in monetization. He notes that Twitter’s ad average revenue per user is $1.02, which is less than half of Facebook Inc (NASDAQ:FB)’s $2.06. Management said on the earnings call that they don’t see why their monetization can’t meet or exceed that of their peers.

The one bad area in Twitter’s engagement was the 8% decline in Timeline views per monthly active user.

Other changes at Twitter

The FBN analyst notes that the management changes haven’t really disrupted Twitter either, as the transitions went smoothly. He expects the appointing of Anthony Noto as chief financial officer to result in more mergers and acquisitions to help further Twitter’s growth story.

He also likes the company’s recent growth initiatives, which include app install ads and promoted video. He sees incremental growth and estimates that app install ads already make up about 21% of Facebook Inc (NASDAQ:FB) ‘s mobile ad revenue, compared to 11% a year ago.