The shares of Twitter are trading higher after receiving a positive recommendation from an analyst at SunTrust Robinson Humphrey today. The analyst upgraded his rating on the stock from Neutral to Buy.
The stock price of Twitter surged nearly 5% to $28.14 per share at the time of this writing, around 1:39 PM in New York.
Twitter stock decline: a buying opportunity
In a note to investors, SunTrust analyst Robert Peck emphasized that recent decline of Twitter share—below its initial public offering (IPO) price provided a “buying opportunity.”
He also believed that the Twitter has an attractive valuation, and potential leadership, board stabilization, and monetizations catalysts are coming shortly.
According to Peck, “We are upgrading TWTR to Buy from Neutral. Given sentiment has washed out (stock down ~50% from 1Q15-end), a series of positive catalysts, we are cautiously optimistic.”
Peck added that they upgraded their rating on Twitter’s stock-based on their belief that the company will quickly release a management clarification and execution, likely during the Labor Day. He said, “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 in line with St., we think user metrics have at least stabilized and can grow from the below catalysts.”
Twitter stock performance
The stock price of Twitter was negatively impacted by investors’ concern regarding its ability to grow its user base. When the company reported its second-quarter earnings, Twitter CFO Anthony Noto warned that the company will not be able to achieve a “sustained, meaningful” user growth for a considerable period. Twitter has 304 million average monthly active users excluding SMS Fast Followers.
Over the past 52 weeks, Twitter shares traded between $21.01 per share and $55.99 per share. The company lost more than 41% in stock value over the past year or 21% year-to-date.
Earlier this month, Twitter co-founder and interim CEO Jack Dorsey acquired approximately $900,000 worth of the company’s shares.
Market observers suggested that Dorsey followed the lead of Noto, who purchased $200,000 worth of Twitter shares. The company’s CFO was the first insider who purchased Twitter shares this year.
Aside from Dorsey and Noto, Twitter board members Peter Currie and Peter Fenton bought shares worth $250,000 and $200,000, respectively. The executives recent stock acquisition showed their confidence in the company’s profitability in the future.