Oppenheimer raised its price target on shares of Twitter (TWTR) on Wednesday as the Wall Street firm shrugged off potential negative impacts to the business after the social media company banned President Donald Trump.
“We believe the company’s reinvigorated focus on revenue products creates ample catalysts for future growth, including a potential subscription offering,” the analysts led by Jason Helfstein said in a note Wednesday. “We are not concerned with usage impact of blocking President Trump.”
Oppenheimer set its new price target for Twitter to $58 per share, up from the $55 the firm saw previously, to imply additional upside of 23% from Tuesday’s closing prices. Oppenheimer also maintained its Outperform rating on the stock.
Twitter’s stock dropped steeply this week after the company permanently suspended Trump’s account on Friday to prevent him from using the platform to incite further unrest among his supporters following the violent protests at the U.S. Capitol last week. Shares fell for six straight sessions through Tuesday, and the stock dipped more than 13% for 2021 to date through Tuesday’s close.
Some other analysts suggested that Twitter’s decision would dent the stock further and hurt profitability, given the likelihood for more regulatory scrutiny and the possibility that Trump would turn to another platform and pull users with him. D.A. Davidson analyst Tom Forte told Yahoo Finance earlier this week that the Trump ban could represent a “10% earnings risk for Twitter.”
But in justifying its more bullish price target, Oppenheimer instead focused on some other more constructive trends around Twitter’s platform upgrades and user engagement. Oppenheimer suggested Twitter may surprise to the upside on fourth-quarter monetize daily active users amid the November elections. This metric of user engagement had grown less than expected in the September quarter as users came back slowly as live sports and other events gradually began to return during the ongoing pandemic.
Oppenheimer also said Twitter could benefit from the re-launch of its Mobile Application Promotion (MAP) product, which offers tools for advertisers to promote mobile applications and drive installs, engagement and conversion. Twitter had highlighted that bugs with its MAP technology negatively impacted operating results in 2019, but said it would launch a revamped version of the product. The relaunch, which is expected to take place this year, could “quickly scale to 10% of revenue,” Helfstein said.
Shares of Twitter rose more than 1.5% intraday on Wednesday, and were higher by more than 46% over the past 12 months.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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