Twitter Set to Rebound on Favorable Analyst Call

Twitter, Inc. (TWTR) shares rose 2% during Wednesday's session after MKM Partners upgraded the stock to Buy and raised its price target to $60 per share.

Analyst Rohit Kulkarni believes that the negative sentiment and headwinds over the past year could reverse in the new year. The analyst believes that the company will have the greatest incremental benefit compared to its peers as brand advertisers accelerate ad spend and live events and product launches resume their normal cadence.

The move comes a day after Wells Fargo reiterated its Equal Weight rating and lowered its price target from $47 to $43 per share. Analyst Brian Fitzgerald believes that the removal of President Trump's account could affect engagement, saying that Trump was a unique animating force for activity and engagement on the platform. 

From a technical standpoint, the stock rebounded from reaction lows made earlier this week. The RSI is near oversold levels with a reading of 36.93, but the MACD is in a bearish trend. These indicators suggest that the stock could see a near-term rebound, but the intermediate-term trend remains bearish.

Traders should watch for a close above the 50-day moving average at $48.29 as the stock moves toward the middle of its price channel. If the stock breaks down from this week's lows, traders could see a move toward trendline support near $45.75. If the stock rebounds higher, traders could see a new price channel form with a high of $58.00 and a low of $45.75.

The Bottom Line

Twitter shares moved higher during Wednesday's session after MKM Partners upgraded the stock to Buy and raised its price target to $60 per share; however, not all analysts are equally confident in a rapid recovery. With the RSI near oversold levels, traders could see the stock form a new price channel that will guide trading over the near term.

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