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BoA gives double upgrade as Twitter intensifies fight against spam

For the social media sector, 2018 was a year of great significance, and the most valuable takeaway from the recent turbulence is the clean-up drive launched by the companies to sanitize their platforms. Showing exceptional commitment, micro-blogging site Twitter (TWTR) deleted millions of suspicious accounts in recent months to remove toxic content, and the efforts are being rewarded.

In a rare move, Bank of America Merrill Lynch upgraded the San Francisco, California-based company’s stock by two notches Thursday – to buy from underperform – lifting investors’ morale. The bank also raised the price target on the stock to $39 from $31, representing a 21% rise from the last closing value.

While cautioning about the high churn rate, the analysts attributed the upgrade to the recent growth in the number of young Twitter users. They also feel Twitter is yet to fully explore the prospects of generating more ad revenue from the platform, an area where it can outsmart rival Facebook (FB).

In a rare move, Bank of America Merrill Lynch upgraded the company’s stock by two notches Thursday

Underscoring the views of the BoA analysts and maintaining its buy rating on the company, JP Morgan earlier said Twitter can leverage its unique digital advertising prospects to generate additional revenue. Twitter shares made strong gains in the premarket Wednesday and continued the uptrend during the session, in contrast to the lower opening witnessed by the major stock market indices including the Dow Jones.

With Twitter CEO Jack Dorsey already taking effective steps to prevent hate speech and malicious propaganda, as he had promised to the regulators, the focus is likely to shift to the emerging services on the platform as the year progresses, including streaming video.

A look at Twitter’s 2018 performance and 2019 expectations

In contrast, analysts are less optimistic about Facebook shedding the data-scandal blues and getting back on track in the near term. Currently grappling with multiple cases related to alleged misuse of user data, Facebook is likely to witness a major management shakeup this year.

Twitter shares have been struggling to regain the lost ground after suffering a sharp fall in mid-2018. Gathering strength from Thursday’s rating upgrade, the stock moved higher and settled near the $33-mark, adding to the positive momentum seen since the beginning of the year.

 

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