Trump Gives Twitter A Second Chance; BTIG Upgrades Stock To Buy

BTIG’s Richard Greenfield believes Twitter Inc’s TWTR daily active user (DAU) growth "is accelerating, particularly in the US, which has a disproportionate impact on Twitter's revenues and profits.”

The analyst upgraded the rating on the company from Neutral to Buy, with a price target of $25.

Improving Engagement

Greenfield noted there was evidence of growing user engagement, given the significant increase in downloads of the Twitter application on iOS devices in the U.S., while a CivicScience survey revealed a rise in daily usage.

The analyst also pointed out that Twitter has come into the spotlight following the U.S. presidential elections in November.

“We do not expect immediate financial benefits; increased engagement over the past few months cannot overcome the revenue downdraft from Twitter's user growth challenges experienced in 2015 and into 2016,” Greenfield stated, however.

In fact, the analyst doesn't expect Twitter’s Q4 2016 results or Q1 2017 guidance to “excite” investors, although the company’s revenues in the second half of 2017 could beat investor expectations, with 2018 coming in well ahead of consensus.

Potential Takeover Candidate

“As Twitter user growth and engagement rebounds, we believe it could reignite takeover speculation, which surged in the middle of 2016,” Greenfield went on to say.

With improving engagement and the media placing the “global spotlight” on Twitter, an attractive could be more appealing than before over the coming year.

In addition, the company is also taking significant steps to limit “safety” concerns regarding trolling and hate speech, which the analyst believes could have scared away some of the potential buyers in 2016.