UPDATE: Pivotal Research Upgrades Twitter, Noting Additional Options To Capture Market Share

In a report published Wednesday, Pivotal Research Group analyst Brian Wieser upgraded

from Sell to Hold and maintained a $34.00 price target. Wieser remarked that “there are limits to the appropriate value investors should pay for a share of the company, and recent highs were most certainly too high.” The analyst noted the key reason for the upgrade is investors continue to focus on user trends. Although more users equates to the platform's durability, validates product choices and adds to the appeal for advertisers, Pivotal Research added that there are other ways to capture market share. The analyst commented, “In other words, our view is that whether Twitter was the same size or even double its current size, its relative role in the advertising landscape (and the potential ad revenues the company would generate) would probably not be substantially different by the year of our terminal value given the manner in which advertisers tend to allocate budgets to media owners. "Consequently, if Twitter fails to meet user growth expectations there is a risk that the stock could fall off for a period of time. Other factors could also drive shares down given the degree to which investors may over-react to news on the stock (see: last month's $3bn rise in Twitter's value on news of the purchase of Gnip, which was likely worth under $200mm and producing only tens of millions of annual revenue). Such events could provide meaningful buying opportunities.” Shares of Twitter closed at $33.39 on Tuesday and are currently up 0.4 percent at $33.55.