UPDATE: Sterne Agee Upgrades Twitter

Shares of Twitter (NYSE: TWTR) are giving back a portion of Tuesday's 12 percent gains, down 1.8 percent to $44.67, in the face of an upgrade from Sterne Agee.

Analyst Arvind Bhatia raised the rating from Underperform to Neutral and maintained the $43 price target.

The prior Underperform rating was based on three key factors:

• Slowing user growth.
• Declining user engagement.
• Premium valuation.

Now, Bhatia sees “potential for user growth and engagement to improve in the near to medium term.” The analyst added “ad engagement and monetization remain healthy.”