Twitter Stock Set to Extend Win Streak on Double Upgrade

TWTR stock showed resiliency in the fourth quarter

by Karee Venema

Published on Jan 10, 2019 at 10:02 AM

The shares of Twitter Inc (NYSE:TWTR) are up 3% to trade at $33.20 -- on pace for a fifth straight win -- after the social media stock received a double upgrade at BofA-Merrill Lynch. This echoes the optimism seen in the options pits, where speculators have been shown a growing appetite for bullish bets in recent weeks.

Looking closer, BofA-Merrill Lynch lifted its rating on Twitter to "buy" from "underperform," and boosted its price target to $39 from $31 -- a 20.9% premium to last night's close at $32.25. The firm cited increased engagement among younger users and expectations for higher ad revenue, calling TWTR a "strong play."

Meanwhile, the stock was also hit with price-target cuts from Cowen and Company (to $25) and J.P. Morgan Securities (to $44). More broadly, most analysts are bearish on Twitter, with the majority of the 26 in coverage maintaining a "hold" or worse recommendation. Plus, the average 12-month price target of $34.60 is a slim 4.2% premium to current trading levels.

In the options pits, though, the stock's top-heavy 10-day call/put volume ratio of 4.44 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the 95th annual percentile. This means that calls have been bought to open over puts at a quicker-than-usual clip.

On the charts, TWTR stock showed resiliency in a tough fourth quarter for the broader equities market -- adding 1%, even as the S&P 500 Index (SPX) plunged 14%. The shares found a familiar floor near $26, home to their pre-bull gap level from February, and are up 26.4% since a late-December test of this region.

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