TWTR

Twitter Breaks Out To 5-Year High

Deutsche Bank upgraded Twitter Inc. (TWTR) to ‘Buy’ on Monday morning, triggering a breakout to a 5-year high. The rally lifted the social media giant above tough resistance at the 2013 IPO opening print in the mid-40s, setting the stage for an eventual test at the all-time high in the 70s. Accumulation readings have lifted to new highs at the same time, establishing a tailwind that could generate superior annual returns, including an uptrend into triple digits.

Twitter Growth Accelerating

The company has posted exceptionally strong user growth in the public Internet space in the last two years, with 21% in 2019 and 34% in 2Q 2020. They’re now working on new monetization initiatives, including innovative digital market products and a subscription portal that reduces or eliminates noise from bots, trolls, and off-topic entries. Skeptical analysts are finally taking note of the brighter outlook, as evidenced by this morning’s bullish call.

Deutsche Bank analyst Lloyd Walmsley commented on the upgrade, stating, “We have been excited about the medium-term prospects for Twitter but unable to get more bullish, given weak advertising channel feedback. We are now starting to hear more positive feedback in the ad channel and would take advantage of the opportunity to build a position now before a stronger ad recovery takes hold and we get into the period of 2021 excitement.”

Wall Street And Technical Outlook

There’s plenty of room for improvement in Wall Street’s long-term outlook, with a mediocre ‘Hold’ rating based upon 8 ‘Buy’, 21 ‘Hold’, and 1 ‘Sell’ recommendation. Price targets currently range from a low of $30 to a street-high $69 while the stock is now trading about $7 above the median $41 target. Shareholders may need to wait for the Oct. 29 earnings release at this point for more positive coverage.

Twitter came public in the mid-40s in 2013 and lifted quickly to an all-time high at 74.73. The subsequent downtrend crushed bulls, posting an all-time low in the mid-teens in 2016. Slow but steady improvement since that time is finally bearing fruit, with the stock rallying above the IPO opening print after two major failures. This psychological victory could underpin committed buying pressure in coming weeks, reaching the 2014 peak in the mid-50s.

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