Twitter could rise another 30% as ad spend is expected to skyrocket, says Bank of America

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Twitter CEO Jack Dorsey.
  • Twitter stock could rise nearly 30% to $ 90 per share, Bank of America analysts say.
  • BofA sees Twitter expand its advertising growth which took a hit during the COVID-19 pandemic.
  • BofA reiterated its buy note on the stock.
  • See more stories on the Insider business page.

Twitter action could rise by around 30% as the social media platform is expected to see further growth in ad sales which recovered after the onset of the coronavirus pandemic, Bank of America said on Friday.

Twitter’s own outlook for the third quarter indicates optimism about its business outlook, the investment bank said in a research note in which it raised its price target and reiterated its buy rating on the stock. .

The bank’s new price target of $ 90 follows Thursday’s closing price of $ 69.57, which implies a 29% increase. BofA raised its price target to $ 82 after Twitter posted a 74% increase in second-quarter revenue Thursday night to $ 1.19 billion. That exceeded expectations by $ 1.07 billion in a Refinitiv analyst survey. It also marked the fastest revenue growth rate since 2014.

Twitter shares rose 4.2% on Friday after rising 5.4% to $ 73.34 during the session.

Twitter’s outlook “suggests more optimism” for the third quarter and revenues look pretty strong, BofA analyst Justin Post said in the note. Twitter was forecasting revenue of $ 1.22 billion to $ 1.3 billion, higher than the $ 1.07 billion expected in a FactSet survey of analysts.

The social media site posted an 87% increase in year-over-year ad revenue to $ 1.05 billion, citing a large increase in demand and improvements to its brand and advertising products at direct response.

“We reiterate our positive opinion on Twitter for 2H based on an increased rebound in brand advertising,” and, among other things, the continued traction of its offerings for the promotion of mobile applications, BofA said. MAP is a technology that helps advertisers promote their mobile applications. Twitter announced Thursday that it has launched its playable advertising pilot project designed to help mobile game advertisers gain new customers by allowing them to experience the game before installing an app.

“[We] are optimistic that the ramp-up of MAP products can deliver solid 23% q / q growth in 4Q, above Twitter’s historic average before the pandemic, ”the analyst said.

Twitter advertising fell 23% to $ 562 million in the second quarter of 2020 year-on-year as the COVID-19 pandemic dampened global demand in the face of the widespread economic recession.

“While growth in user numbers remains an issue, we maintain our optimistic view that Twitter can increase its still (very) limited reach as a differentiated information and content platform, with strong distribution on d ‘other media,’ BofA’s Post said.

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