Media

Can Twitter Catch Social Media Mojo?

Twitter Inc. (NYSE: TWTR) is scheduled to report its second-quarter financial results on Tuesday. The consensus estimates from Thomson Reuters call for $0.04 in earnings per share (EPS) on $481.13 million in revenues. In the same period of the previous year, the social media company posted EPS of $0.02 and $312.17 million in revenue.

The purpose of social media is to network, connect with others and share information and experiences. As one of the larger names in social media, Twitter must stay on the cutting edge of these trends, continually improving its users’ experience as well as its own network. Through a recent partnership with Google Inc. (NASDAQ: GOOGL), Twitter has succeeded in doing both, according to a key analyst.

Canaccord Genuity has a Buy rating for Twitter with a price target of $52, implying an upside of about 45% from current prices.

The brokerage firm thinks Twitter has done well in executing on the initiatives set out during its analyst day back in November. However little traction has actually been made on the user front. Canaccord Genuity thinks there could be a lag between product roll-outs and monthly active user (MAU) growth.

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Recently, Twitter has announced or launched several products to help the user experience. Canaccord Genuity believes that the Google integration may have a sizable impact. Google attracts the most traffic of any property globally on desktop and mobile, and visitors specifically to its U.S. mobile search property represent an opportunity to expose 100 million monthly users to Twitter content.

Only a few weeks into the partnership, a proprietary survey from the brokerage firm has shown that real-time tweets already show up in 54% of the Google search queries sampled. Twitter yet again proves its legitimacy as a live news platform, as 90% of news-related searches surface tweets.

Ultimately, Canaccord Genuity only believes that this is just the beginning for the Twitter/Google integration. Rolling out to desktop and international could significantly increase the reach and any improvement in the performance of these tweets.

The firm estimates the integration currently could add about 3.5 million additional visitors to Twitter from Google with this first iteration. This impact could potentially expand to greater than 40 million over time.

Other analysts recently weighed in on Twitter ahead of earnings:

  • Brean Capital reiterated a Buy rating but lowered its price target to $47 from $55.
  • Deutsche Bank reiterated a Buy rating with a $60 price target.
  • Cantor Fitzgerald reiterated a Buy rating with a $50 price target.

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Shares of Twitter were down 1.1% at $35.78 on Friday afternoon. The stock has a consensus analyst price target of $45.32 on a 52-week trading range of $33.51 to $55.99.

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