Jefferies Initiates Coverage On Twitter, Cites Online Video Ads As Key Catalyst

Jefferies on Wednesday issued a company note on Twitter Inc TWTR, initiating coverage on the social media platform. Jefferies rates Twitter as a Buy with a $65 price target.

Analysts Brian Pitz and Brian Fitzgerald wrote, "We believe Twitter is a leader in the crowded social media space and is particularly well-positioned to benefit from online video ad & mobile tailwinds. Continued product improvements including more integrated video and the recent Periscope launch should help increase engagement. By '17, online video ads could be a $17B+ /year opportunity in the US and Twitter is well-positioned to capture a meaningful piece of that spend."

The analysts note five catalysts for Twitter's stock going forward:

• 1. Twitter is positioning itself to take a meaningful share of the online video advertisement market. Analysts believe that this could be a $17 billion per year opportunity by 2017.
• 2. Twitter is focusing on its user interface. The goal is to make the website more accessible to boost engagement.
• 3. Twitter has announced syndication monetization deals and is expected to expand non-core monetization efforts in the future.
• 4. Improved relations with developers from Fabric. This relationship would allow Twitter to optimize multiple sources of advertising.
• 5. International monetization. This may increase revenue and provide more leverage to the company by growing its audience base.

Shares of Twitter closed Tuesday at $50.08. Shares were up more than 1.4 percent in Wednesday's pre-market session.