Twitter Will be a "Healthy Beat" on Earnings – Wells Fargo

Though the analysts are still concerned with user growth and engagement, Wells Fargo expects Twitter Inc TWTR to beat earnings expectations when it reports tomorrow after the close. The analysts leave their Market Perform rating and a price target range of $44-46.

Regarding the Super Bowl, the Wells analysts say that the volume of Tweets was “unimpressive” at just 14% growth year-over-year. Twitter will likely point to the event as a way to gain monthly active users (MAU), but Wells sees it as an indication on engagement.

Wells is optimistic that promoted tweet syndication will gain “rapid adoption.” The analysts would like to see more partners – besides Flipboard and Yahoo Japan – at the launch.

The price target reflects a premium valuation, which the analysts believe Twitter will maintain with rapid growth, margin expansion opportunity and differentiated competitive position. In its risks, Wells points to execution questions and competitive pressures.