Reuters / Brendan McDermid
- JPMorgan upgraded Twitter on Tuesday, giving it a $50 price target.
- The bank estimates ad revenues will grow by more than 20% in upcoming quarters, with a boost from the World Cup.
- Follow Twitter's stock price in real-time here.
The World Cup could help propel Twitter's surging stock price another 16% higher, JPMorgan said Tuesday.
The bank upgraded shares of the social-media company, giving them a $50 price target as it continues to show signs of a financial turnaround. The bank's previous target was $39.
"We are raising our estimates on Twitter shares as we believe advertising momentum is strengthening, particularly among large marketers," analyst Doug Anmuth said in a note to clients. "Industry conversations suggest the value for advertisers on TWTR is increasing, driven by double-digit daily-active-user growth (6 straight quarters), improving product for both users & marketers (especially video), higher click-thru rates & ad engagement, & better pricing as cost per engagement (CPE) continues to decline (we estimate -29% in 2018)."
JPMorgan estimates Twitter can post ad revenue growth of 27% for the second quarter and continue through the rest of 2018, noting that even its fourth quarter estimate of 21% growth "likely remains conservative."
The World Cup, which kicks off in Russia this week, can also be a boost for Twitter, the bank says. The company has a history streaming sports, even before this tournament.
"While we are not making any changes to our user estimates, we believe FWC also has the potential to increase DAUs and MAUs in 3Q, likely more international than in the US," Anmuth said. "Live events and sports drive more engagement on Twitter as evidenced by the 672 million tweets sent during the 2014 Fifa World Cup, 45 million tweets sent during Super Bowl 2018 (4.8 billion impressions), and 33 million tweets sent during the 2017-18 College Football season (4.9 billion impressions).
Shares of Twitter rose more than 5% after JPMorgan's price target hike was published, continuing a hot streak that has its stock price up 33% since the announcement that it was being added to the S&P 500 index.
"Twitter remains 1 of our top ideas, along w/FB & AMZN, & is on the JPM Analyst Focus List," the bank said.
