It is impossible not to congratulate Twitter Inc. (NYSE: TWTR) for its earnings report. The issue here is that the initial reaction to the great earnings may have simply been too great. The stock was up just over 20% on last look, but it had been up 30% in the after-hours reaction. It seems as though many short sellers may have tried doubling down after the pop rather than panicking out of their short selling bet against Twitter. Analysts have chased their official price targets much higher.

Twitter blew the earnings out at $0.02 in earnings per share (EPS) on an operating basis. The consensus was for -$0.01 EPS, and the reference from WhisperNumber.com was $0.00 per share. Twitter’s revenue was 10% above expectations, at $312 million versus estimates of $283 million from Thomson Reuters.

The analyst community on Wall Street is chasing up the price targets higher for Twitter, but there is a serious word of caution as well. The ratings remain very mixed, and we have seen some analysts downgrade the stock.

It seems that a bit of caution may be on that monthly active user count rising to 271 million. CNBC showed a consensus target of about 267 million users, but we had suggested that it was going to have to be around 275 million users to really knock the cover off the ball. Still, Twitter has many users who do not use the service as a registered user that can be converted.

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We have now seen even more analyst upgrades, downgrades and price target changes. This is a more updated analyst rating montage for Wednesday after earnings:

• Evercore Partners downgraded it to Sell from Neutral.
• Pivotal Research downgraded Twitter to Sell from Hold with a $38 price target.
• Cowen raised the rating to Market Perform from Underperform with a $45 price target.
• Wunderlich maintained its Hold rating but raised its target to $45.
• UBS raised Twitter to Neutral from Sell.
• Robinson Humphrey maintained its Buy rating and raised its target to $58.
• Janney maintained its Buy rating but boosted its target to $60.
• RBC Capital Markets maintained its Buy rating and raised its target to $65.
• Barclays maintained its Overweight rating and raised the target to $60.
• Goldman Sachs maintained its Buy rating and raised its price target to $63.
• Merrill Lynch raised its rating to Buy from Neutral with a $60 price target.

Again, investors and traders alike cannot ignore that short interest in Twitter. As of the July 15 settlement date, Twitter’s short interest was 33.86 million shares. While that is massive short interest, it is still lower than the peak of 50 million shares at the end of April.

While we thought Twitter was bottoming out recently, the recovery has been more than most expected. You can tell that simply by looking at the analyst changes above.

Twitter shares closed on Tuesday at $38.59, and Wednesday’s midday trading reaction had shares up 20.7% at $46.60 on more than 86.6 million shares (as of 1:20 p.m. Eastern). The stock was indicated up 25% earlier in the morning around $48.65 premarket, with an intraday high of only $48. Twitter shares were up around 30% and challenging the $50 handles again on Tuesday night in the immediate reaction.

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