In reaction to Twitter’s (TWTR) strong 2Q14 results where both top and bottom lines comfortably exceeded consensus estimates, Cantor Fitzgerald analyst Youssef Squali maintained a Buy rating and raised his price target to $58 (from $40).
Squali wrote, “What’s more important is that the drivers for this growth seem sustainable, implying faster-than-expected growth and margin over time. While monetization was the key revenue driver, MAUs were better than feared, helped by products and platform enhancements. Stronger results amidst a negative sentiment should propel the stock higher”.
Squali continued, “We view growth in active users as the single most important metric, given Twitter’s global aspirations and the size of its main competitor. User engagement (total timeline views) was also consistent with 1Q14’s at +14.6% Y/Y, to 173B. Products/platform enhancements seem to have helped user growth while the World Cup seems to have helped engagement”.