Why Goldman Sachs Expects 'Strong' Twitter Earnings

Goldman Sachs said Monday that it expects Twitter Inc TWTR to have a "strong" Q1 earnings report on April 28. The analysts outlined a report with 304 million monthly active users and 16 million net new users, driven in part by the Super Bowl and Oscars. Goldman said it continues to "believe we are in the early stages of a very long growth cycle for Twitter" where it will be able to grow users and engagement.

The firm rated Twitter a Buy with a $63 price target, more than $12 higher than Friday's $50.66 closing price.

Goldman said that Twitter's product development "should help drive user growth and engagement," specifically citing the "While You Were Away" feature as one positive change.

Twitter is also gaining momentum among advertisers, Goldman discovered in conversations with professionals. The new ad formats at Twitter and other online companies are gaining momentum with brands and direct response advertisers.

Specific to the Q1 report, Goldman said that it expects Twitter to deliver $460 million in revenue with EBITDA of $99 million, both of which are slightly above Wall Street expectations. However, Goldman did highlight that there is "the potential for further outperformance based on our recent checks with advertisers and channel partners."

Twitter was indicated higher in pre-market trading. The stock last traded up 0.7 percent to $51. Year-to-date, the stock has gained more than 40 percent following a more than 43 percent loss last year.