After conducting a survey in early December of more than 1,000 U.S. consumers about social media use, Bank of America Merrill Lynch analyst Justin Post upgraded Twitter (TWTR) to Buy from Underperform. According to the survey, Twitter’s penetration increased to 48% of respondents, and improving metrics in the 18-29 demographic suggest more younger users are turning to Twitter. Meanwhile, Cowen analyst John Blackledge upgraded Snap (SNAP) to Market Perform as his Key 2019 Ad Buyer survey pointed to rising advertiser adoption.
BUY TWITTER: In a research note on Thursday, Bank of America Merrill Lynch’s Post upgraded Twitter two notches, to Buy from Underperform, after conducting a survey in early December of more than 1,000 U.S. consumers ages 18-65 to measure internet usage behavior for online media sites. The survey showed that Twitter penetration increased to 48% of respondents and the percentage of users reporting deceased usage fell slightly, he noted. While the analyst pointed out that churn remains elevated, improving metrics in the 18-29 demographic suggest more younger users are turning to Twitter. 9% of users indicated they planned to user Twitter more next year, up from 6% in his second quarter survey, the analyst added. Post also raised his price target on Twitter’s shares to $39 from $31. Additionally, the analyst told investors that the survey suggested Google (GOOG, GOOGL) and Facebook’s (FB) Instagram have the most positive usage trends, while the negative effects from Snap's redesign appear to have continued.
COWEN UPGRADES SNAP: Meanwhile, Cowen’s Blackledge upgraded Snap to Market Perform from Underperform, with a $6 price target, after surveying 50 U.S. Ad Buyers representing about $14B in total ad spend in early December 2018 to identify emerging trends in 2019 and beyond. The analyst told investors that his Key 2019 Ad Buyer survey pointed to rising ad buyer adoption of Snap overall and Direct Response ad units, and ad buyers appearing more positive on return on investment and pricing since move to auction. While user growth and competitive issues remain, given about 60% share decline since last year, the stock’s valuation is a “bit more reasonable, he contended.
PRICE ACTION: In late morning trading, shares of Twitter have gained over 2% to $32.99, while Snap’s stock is fractionally higher to $6.32.