If you have followed Twitter Inc. (NYSE: TWTR) as an investment for very long, chances are high that you would agree that it has hurt more long-term investors than it has rewarded. Twitter may have received a second life after President Donald Trump has continued to use Twitter as his primary first efforts for public communications rather than old world media.

And maybe it really is true that nothing lasts forever, even if that has been bad for longer than most investors would care to remember. Twitter just received an analyst upgrade on Wednesday, February 8, 2017. BTIG’s Richard Greenfield raised Twitter’s stock rating to Buy from Neutral. He also assigned a $25 price target.

While there is a rationale on the numbers, much of this upgrade is around the president’s use of Twitter and the opportunity that brings, and there is even an M&A angle that might excite some of those old buyout hopes that came to nothing in the past.

The firm’s new target price is based on 15 times its estimated 2018 enterprise value over EBITDA, versus a current value of about 13 times for its estimated 2017 enterprise value over EBITDA.

Greenfield’s upgrade was based on the belief that Twitter’s daily active user growth is accelerating. That was particularly the case in the United States, which has a disproportionate impact on Twitter’s revenues and profits.

Wednesday’s upgrade does warn that investors should not really expect immediate financial benefits, and some of the downdrafts may continue to weigh on Twitter near-term. Greenfield’s report said:

The evidence of growing user engagement is evident in a meaningful uptick in downloads of the Twitter application on iOS devices domestically and a CivicScience survey that shows an increase in daily usage. It is undeniable that Twitter has been thrust into the global zeitgeist following the US Presidential Election in November 2016. We do not expect immediate financial benefits; increased engagement over the past few months cannot overcome the revenue downdraft from Twitter’s user growth challenges experienced in 2015 and into 2016. In turn, we are not expecting Twitter’s Q4 2016 financials, nor commentary on Q1 2017 financials to excite investors. However, we believe second half 2017 revenues could exceed investor expectations with 2018 well above consensus.

Perhaps one key area of excitement that could come into play is where Greenfield called Twitter a potential takeover, with caveats of course. One such caveat is that Twitter’s value before the upgrade was just over $13 billion. Greenfield said:

As Twitter user growth and engagement rebounds, we believe it could reignite takeover speculation, which surged in the middle of 2016. Nobody wanted to step in to pay up for Twitter, given the fear that it was heading off a cliff. But with engagement improving and the global spotlight being placed on Twitter by the media, an acquisition could be far more appealing over the next year. Not to mention, Twitter is taking meaningful steps to limited “safety” concerns around trolling and hate speech, which we believe scared away some potential buyers last year.

Then there is the Trump angle. Greenfield aligns the president’s use of Twitter with President Franklin Roosevelt’s fireside chats radio broadcasts. Roosevelt used those fireside chats to communicate directly to the public and his audience was an estimated 60 million Americans. Greenfield shows that Trump’s Twitter followers notably accelerated after the election and have more than doubled in the past six months — now over 24 million.

24/7 Wall St. looked on Twitter, and on last look the @realDonaldTrump handle had 24.2 million followers. The official @POTUS handle for the president has 15.1 million followers.

Greenfield went on to show how Trump is dominating on Twitter and how the media has effectively become a giant marketing vehicle for Twitter. Wednesday’s research note said:

Not only is President Trump actively using Twitter to communicate directly with the American people, his tweets are impacting consumers all around the world. While we believe this is clearly helping drive users of the Twitter platform, it is the ability for consumers to react in real-time to these tweets that is driving engagement higher. Listeners to FDR’s fireside chats had no outlet for easily airing their views beyond 1-to-1 conversations or a letter to the editor of a newspaper. Whereas Twitter creates a relatively frictionless way for people to share their views and create an on-going dialogue with other consumers around the globe.

Worth noting, one of the greatest challenges Twitter has faced is consumers passively using the platform like an RSS news reader. President Trump is giving people a reason to be actively engaged on an on-going basis.

President Trump actually is not an anomaly as a politician using Twitter as a direct broadcast medium. What makes Trump’s use of Twitter different is the “importance” of the content he is putting on Twitter. Trump is paving the way for other public figures to be more forthcoming on Twitter and much more importantly, as a place for consumers to look and react to those messages. Trump is giving consumers a reason to learn how to use Twitter, furthering the reason for public figures etc. to put content on the platform. Twitter is in effect getting a second chance to attract and retain users.

Again, BTIG does keep some risks outlined here. One such risk is that Twitter’s simplification effort (burying Moments and creating Explore) has to maintain the site’s stickiness. Greenfield also noted that Twitter has to take advantage of higher engagement metrics to innovate and not squander its second chance with Twitter users.

Note that BTIG is above consensus for 2017 and 2018 earnings and revenue metrics. The firm’s estimates are listed as follows:

• 2017 revenues of $2.85 billion and $0.64 adjusted EPS (consensus $2.79 billion and $0.60).
• 2018 revenues of $3.44 billion and $0.92 adjusted EPS (consensus $3.02 billion and $0.75).

Twitter’s shares were trading at $18.26 as of Tuesday’s closing bell, but the social media shares were indicated at $18.50 early on Wednesday. Unfortunately, Twitter shares were flat at $18.25 by mid-morning. Twitter has a 52-week range of $13.73 to $25.25 and a prior consensus analyst price target of $16.32.

After this upgrade, Twitter’s consensus price target from Thomson Reuters updated to $16.57, but that is actually a tad lower than the $16.92 a month ago and $16.95 just two months ago.

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