J.P. Morgan upgraded Twitter (NYSE: TWTR) to overweight from hold on Monday, boosting shares of the social media stock, which have been staging a comeback this fall.
"We are upgrading TWTR shares to overweight with a $27 price target," analyst Doug Anmuth wrote in a note. He called it "one of our top" small- to mid-cap picks for 2018.
"We believe both the TWTR story and financial results will strengthen over the next year as the company continues to build on its differentiated value proposition for users & returns to revenue growth," he wrote.
The new $27 target (up from a previous target of $20) represents 22% upside over the next 12 months from Friday's close.
Anmuth laid out four reasons behind the upgrade:
Video and live streaming improvement. What's more, he now estimates 10% daily active user growth next year, estimated advertising revenue growth greater than 8% in 2018.
Anmuth also said Twitter should be "GAAP profitable" in 2018.
After struggling the previous three years as bigger rival Facebook reached higher and higher heights in terms of user numbers and stock price, Twitter rebounded in the second half of 2017 as investors bet the stock had reached a point that made it a value given its core user base that it had yet to truly effectively monetize.
Twitter reported better-than-expected earnings and revenue numbers for the third quarter, but monthly active users were about inline. Twitter shares are up 36% in 2017.
Shares in the social media behemoth soared Monday morning by $1.81, or 8.1%, to $24.04.
