While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.
What: Shares of Twitter, Inc. surged 5% this morning after Stifel Nicolaus initiated coverage on the microblogging giant with a buy rating.
So what: Along with the upgrade, analyst Jordan Rohan planted a price target of $75 on the stock, representing 24% worth of upside to yesterday's close. While value investors might be turned off by Twitter's seemingly high price multiples, Rohan thinks there's plenty of room to run given his view of accelerating earnings momentum.
Now what: According to Stifel, Twitter's risk-reward trade-off is particularly attractive at this point. "With a current enterprise value of approximately $42 billion, we believe shares clearly discount potential upside to existing estimates," Rohan noted. "And, while it would be much safer and easier to back away from the shares at current levels, we believe strategic value, business model flexibility, and earnings momentum will keep them moving higher." Given the gale force tailwinds working in Twitter's favor, it's tough to argue that its prospects aren't worth paying up for.
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The article Why Twitter, Inc. Might Take Off in 2014 originally appeared on Fool.com.Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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