Goldman Sachs Still Buying Twitter, Highlights Reacceleration In Product And Platform Innovation

Twitter Inc TWTR's bullish case heading into its second quarter earnings (July 26) gained some momentum on Tuesday after Heath Terry of Goldman Sachs maintained a Buy rating on the stock with an unchanged $22 price target.

Terry is expecting Twitter to report revenue of $608 million in the second quarter, which represents an improvement of 21 percent year-over-year and 36.4 percent from the prior quarter. The analyst is expecting Twitter to report an adjusted EBITDA of $155 million (25.5 percent margin versus 30.4 percent last quarter).

Terry is also projecting Twitter to report a 1 percent year-over-year gain in its monthly active users to 308 million as the "heavy news flow" topics such as NBA and NHL finals, Brexit and U.S. Presidential primaries could have driven incremental usage growth.

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The analyst also cited comScore data through May which suggests a flat quarter-over-quarter total time spent by users on Twitter's platform. In addition, the company released at least 17 new apps, features and other enhancements which marks an re-acceleration in product and platform innovation which could help drive monetization and user engagement.

Finally, Terry suggested that while Twitter's efforts at product improvement "have yet to have an impact" on the business, there is still "significant value" in the social media's user base, content and interaction data.