Twitter, Inc. (TWTR) shares rose nearly 3% during Tuesday's session after Bank of America analyst Justin Post told investors that it was among his top small- to mid-market capitalization picks for 2020 following the launch of the "Promoted Trend Spotlight" earlier this week. However, the stock gave up some of those gains during the after-hours session.
The analyst views the new feature as a premium video tool for brand advertisers looking to reach new customers on Twitter's Explore tab. With nearly half of active daily users visiting the Explore tab every day (as of 2017), the new feature could help the company benefit from the shift toward video ad units.
Bank of America maintains its Buy rating and its price target of $39.00 per share on the stock, but it warns that there could be a difficult share setup into fourth quarter earnings, as Street estimates have not accounted for enough 2020 expense growth. That said, BofA believes that the stock is well positioned following fourth quarter earnings, and Twitter stock is among the firm's top picks.
From a technical standpoint, the stock rebounded from trendline support toward reaction highs during Tuesday's session. The relative strength index (RSI) turned upward with a reading of 59.67, while the moving average convergence divergence (MACD) remains near the zero-line. These indicators suggest that the stock has room for more upside, but there's limited bullish momentum behind the recent move.
Traders should watch for a breakout from trendline resistance toward the 200-day moving average at $36.62. If the stock breaks those levels, it could close the gap from late October at nearly $40.00. A breakdown from current levels could lead to a retest of trendline support near $31.50, while a breakdown from those levels could lead to a move to retest November's lows, although that scenario appears less likely to occur.
The author holds no position in the stock(s) mentioned except through passively managed index funds.