Should You Buy Twitter (TWTR) Stock Before 2018?

Shares of Twitter (NYSE:TWTR) hit a new 52-week high on Monday following an upgrade from analysts at JPMorgan Chase (NYSE:JPM) . Now, as the previously struggling social media company finally has momentum, many investors are wondering: is this stock a “must own” heading into 2018?

The tech sector, spurred by the likes of Amazon (NASDAQ:AMZN) , Facebook (NASDAQ:FB) and Alphabet (NASDAQ:GOOGL) , helped lift markets and indexes to new highs throughout 2017. And many investors are likely to stay in technology stocks in the New Year, especially as tech invades more and more industries.

But while many investors hold onto these tech giants into 2018, Twitter remains a polarizing stock that has failed to live up to many investors’ expectations over the last few years.

With that said, let’s dive into some of Twitter’s recent moves and current fundamentals to determine if it is an enticing stock for 2018.

Latest Upgrade

On Monday, in a note to clients, JPMorgan analyst Doug Anmuth upped his Twitter rating from “Hold” to “Overweight.” The JPMorgan analyst also upped Twitter’s price target from $20 per share to $27 per share, which represents about a 20% upside over the next 12 months based on Friday's closing price (also read: Twitter Soars to 52-Week High on JPMorgan Note).

Anmuth also called Twitter one of his top small-to-mid-cap picks for 2018. The analyst views Twitter in a positive light moving forward because of the company’s ability to create a different and new “value proposition.” He also thinks Twitter should become "GAAP profitable" in 2018.

On top of that, the JPMorgan analyst noted that he believes Twitter will be able to improve and leverage video and live streaming. Furthermore, he expects the social media company to grow its daily active user base by 10% and up its advertising revenue by 8%.

Twitter also just officially implemented a new policy aimed at policing abusive and violent content on its platform. The move hopes to slowly erode the prevalence of hate groups and speech that have hurt the social media company’s reputation in recent years.

Fundamentals

Twitter is currently a Zacks Rank #2 (Buy) and sports an “A” grade for Growth in our Style Scores system. Based on our current Zacks Consensus Estimates, 2018 is expected to be a turn around year for Twitter.

Within the last 60 days, Twitter has received eight upward earnings estimate revisions for fiscal 2018, against no downgrades.

Twitter’s 2018 revenues are expected to climb 7.39% to hit $2.58 billion. In terms of bottom line expansion, the social media company’s earnings are projected to reach $0.44 per share. This full-year 2018 projection would mark 9.27% growth over its projected 2017 total.

Looking farther ahead, Twitter’s expected EPS growth over the next three to five years currently rests at an annualized rate of 21.50%. This helps show investors that Twitter is projected to grow its bottom line for years to come, on top of what is expected to be solid top and bottom line expansion in 2018.

Bottom Line

One of the pioneering social media companies has failed to live up to expectations in recent years, as user growth seemingly failed to catch up to Twitter’s proliferation and ubiquity in the modern news and media landscape.

But Twitter has started to position itself as a viable option for live streaming and video content. An increased presence in the world of live video could make Twitter invaluable in the minds of many advertisers.

On the back of the major JPMorgan upgrade, shares of Twitter surged over 10% to hit a new 52-week intraday trading high of $24.53 per share. And before today’s climb, shares of Twitter had popped 26.45% over the last 12-weeks alone.

Yet, investors shouldn’t worry too much about this new high, as Twitter seems poised to jump into a new threshold based on user growth projections and top and bottom line expansions in 2018.

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