Twitter, Inc. (TWTR) shares rose about 1.4% on Friday by mid-day after MKM Partners upgraded the stock to Buy from Neutral with a $40.00 per share price target. Analyst Rob Sanderson was encouraged by the company's growth in users, which increased by double digits for the fifth straight quarter. Sanderson indicated that the company was "here to stay" and still has "mass market potential" that could be bolstered by monetization gains.
Earlier this week, Morgan Stanley analysts also upgraded Twitter stock from Underweight to Equal Weight and raised their price target to $29.00 per share. Analyst Brian Nowark suggested that the company's video product continues to perform well in a market where advertisers are constantly seeking higher-quality video impressions. Constructive conversations with advertisers and improved user numbers further bolster the risk/reward case. (See also: Twitter Jumps, Morgan Stanley Upgrades on Ad Sales.)
From a technical standpoint, the stock rebounded from lower trendline support earlier this month past the pivot point and 50-day moving average at around $31.80. The relative strength index (RSI) appears relatively neutral, with a reading of 57.49, but the moving average convergence divergence (MACD) experienced a bullish crossover. These indicators suggest that the stock could see a continuation of its positive momentum.
Traders should watch for a breakout from current levels to R1 resistance at around $34.74 or prior highs of around $37.00. A breakout from these levels could lead to a move toward R2 resistance at $40.48. On the other hand, a breakdown back below the 50-day moving average and pivot point could lead to a move to lower trendline resistance at $29.00. A breakdown from these levels could lead to a move to S1 support at $25.33. (For more, see: Twitter a Buy on Market Potential: MKM Partners.)
Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.