Citi Upgrades Twitter Amid Improving Sentiment

Shares of Twitter Inc (NYSE: TWTR) were trading lower by around 0.60 percent early Monday morning despite a notable upgrade from Wall Street.

Citi's Mark May upgraded Twitter from Sell to Neutral with a $20 price target.

Twitter has been lagging its internet peers year-to-date, up just 22 percent since the start of 2017 versus a 45 percent gain in the analyst's internet Index. (See May's track record here.)

At the same time, Twitter is up 40 percent since its post-second quarter lows, when the company failed to show investors any net subscriber growth and shares tumbled below key support levels.

The analyst attributed the recent momentum in Twitter's stock and reasons to drop a bearish outlook to the following: 

• Easing comps ahead that could result in year-over-year revenue growth in the fourth quarter.
• A stabilization in user metrics and ad product improvements, which bodes well for growth.
• Cost saving measures such as headcount reductions which are supportive of margin upside.
• Recent success in video partner agreements that will boost user engagement and monetization initiatives.
• "Encouraging commentary" from agency contacts.
• A "fair" valuation on various metrics, including free cash flow and comparisons to traditional media companies.

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