While the year has most likely been miserable for most, it has been an excellent one for internet stocks. This is hardly surprising, considering a large chunk of 2020 has been spent indoors, engaged in various online activities – be it shopping, gaming, or shouting at other people– as is customary on Twitter (TWTR).
Ok, “online shouting” might not be everyone’s preferred mode of communication, but considering the year’s polarizing issues, it is not that far from the reality.
But what happens now that vaccines are ready to slowly return us all to some kind of normal existence?
J.P. Morgan analyst Doug Anmuth thinks “some rotation away from at-home winners and toward reopening beneficiaries on vaccine distribution,” should be expected in 2021.
Such analysis is easy to understand. However, in contrast, the analyst expects Twitter to continue to shine in the new-old paradigm.
So much so, Anmuth recently upgraded Twitter’s rating from Neutral (i.e. Hold) to Overweight (i.e. Buy) and raised his price target from $52 to $65. Investors could be pocketing gains of 16%, should Anmuth’s forecast go according to plan. (To watch Anmuth’s track record, click here)
Why the bullish adjustment, then?
The 5-star analyst explained, “We are bullish on online advertising in 2021 and expect industry growth to reaccelerate. We believe TWTR will show the biggest rebound given its sharper pandemic-driven ad decline, along with revenue prioritization throughout the company, early benefits from rebuilt ad tech through the new Ad Server and rollout of Map 2.0, and increases in both advertiser count and ad load.”
The risk/reward for Twitter also appears more favorable, says Anumth. While TWTR shares have gained 74% this year, the figure is less impressive when compared to some of its peers’ performance; Snap, for instance, is up by 224% and Pinterest stock has gained an even more eye-popping 277%.
Therefore, with shares trading at “a substantial discount to its peers,” the analyst calls Twitter “under-owned,” and “one of our top picks for 2021.”
Overall, however, Anmuth is among a minority on Wall Street. Of the 27 current analyst reviews, 19 say Hold, 7 suggest Buy, and 1 recommends to Sell, all coalescing to a Hold consensus rating. Additionally, the analysts expect Twitter stock to return some of its 2020 gains back to the market; going by the $47.52 average price target, a 15% drop is in the cards. (See Twitter stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
