Analysts: Big Strides For Twitter Inc.'s User Monetization

Twitter Inc.

shares gained nearly 17 percent Friday after the company posted encouraging results from efforts to monetize its 288 million active users. The San Francisco social media company's shares changed hands recently at $48.24, up $6.98. A key measure of monetization grew 59 percent in the recent period and Twitter's adjusted earnings of $0.12 cents a share was double the Wall Street Consensus. But monthly active users grew sequentially by just 1.4 percent to 288 million. "We'd like to see the company actually deliver on user numbers in a consistent manner," Wedbush's Shyam Patil said, maintaining a Neutral Rating. Analysts appear divided on Twiter, with 17 of 34 who follow the company maintaining Buy ratings and 16 maintaining a Hold, according to FactSet. One analyst maintains a Sell rating. Patil, who boosted his price target 25 percent to $50, called monetization "stellar" and gained reassurance from the company's prediction that monthly user growth will resume in the current quarter. Twitter blamed the decline on "seasonality" as well as revisions to the Apple operating system, which caused about 4 million Twitter users to lose their passwords. Based on Twitter's recent results and outlook, Patil increased his 2015 revenue estimate more than 2 percent to $2.35 billion. Analysts on average expect $230 billion. Cantor Fitzgerald's Youssef Squali reiterated a Buy rating and said recent results were outstanding. "A few more quarters like this should reposition Twitter and make it a core holding rather than a trading stock," Squali said. Squali reiterated a Buy rating and raised his target nearly 7 percent ot $62. Likewise, SunTrust's Robert S. Peck maintained a Buy rating citing "momentum," potential user growth and a not-yet penetrated market. Peck maintained a $58 target and said Twitter will be able to continue to increase its monetization of its user base.