Twitter Tests 200-Day Moving Average After Analyst Upgrade

Bank of America Upgrades the Stock to Buy With a $39 Price Target

Twitter, Inc. (TWTR) shares rose more than 3% on Thursday morning after analysts upgraded the stock and raised their price target. Bank of America analysts upgraded Twitter stock from Underperform to Buy and raised their price target from $31.00 to $39.00, citing surveys showing improving metrics in the 18- to 29-year-old demographic. The $39.00 price target represents a roughly 20% premium.

The Bank of America analysts' survey found that nearly 10% of users planned to use the social media service more over the coming year – a 6% improvement over the second quarter survey. If user engagement continues to improve along with Twitter's direct response advertiser base, the analyst team believes that there could be significant average revenue per user (ARPU) gains over the coming year.

JPMorgan analysts also suggested that sell-off in Twitter stock was overdone on Dec. 20, following a bearish Citron Research report about the platform's quality. While the stock has rallied since that point, the analysts' Overweight rating and price target of $45.00 per share suggests that there could be more upside potential. The analysts believe that Twitter's platform health efforts could have a positive impact on engagement and advertising over time.

Technical chart showing the share price performance of Twitter, Inc. (TWTR)

From a technical standpoint, the stock moved sharply higher off of its prior lows in late December toward its 200-day moving average at around $33.76. The relative strength index (RSI) remains neutral with a reading of 55.67, but the moving average convergence divergence (MACD) experienced a bullish crossover. These indicators suggest that the bull rally could have more room to run over the coming sessions.

Traders should watch for a breakout from the 200-day moving average and R1 resistance at $35.16 toward upper trendline resistance near $38.00. A further breakout from those levels could lead to R2 resistance at $41.59. If the stock fails to break out from R1 resistance, traders should watch for some consolidation above the pivot point at $30.71 before another attempt higher. 

The author holds no position in the stock(s) mentioned except through passively managed index funds.

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