• by Karlene Lukovitz  @KLmarketdaily, October 13, 2020

A Deutsche Bank analyst has upgraded Twitter Inc. from hold to buy, based on his view that the platform will benefit from a resurgence in U.S. national brand advertising.

"Twitter is well-positioned to benefit from a big event landscape in 2021, expansion into more performance advertising on the back of its ad server rebuild and new [mobile application promotion] product, and an eventual high-margin subscription product," Lloyd Walmsley wrote in a note to investors, per a report by TheStreet.

While Twitter’s user base has expanded due to the COVID pandemic, its revenue growth has been hampered by its reliance on brand advertising, which has been the most-impacted part of the advertising market, Walmsley said.

But Deutsche Bank is “starting to pick up signs of a resurgence in U.S. national brand advertising in general, and specifically on Twitter in the third quarter," he wrote, and 2021 looks promising because of a “big event landscape.”

Events that are likely to spur engagement and growth for Twitter — assuming that they play out as hoped — include a resurgence in new TV and movie releases as production resumes; resumption of full seasons for NFL, MLB, NBA and college football; and internationally, the Olympics, the EuroCup and the World Baseball Classic, he said. He added that Japan is a particularly strong market for Twitter.

Walmsley set a share price target of $56, up from $36, advising investors to consider getting in now, before the big lift expected in 2021.

Not everyone concurs. In an October 11 report, TheStreet's own Quant Ratings rated Twitter a hold.

"The primary factors that have impacted our rating are mixed --some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks," stated the report. "The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow."