Top analyst: 4 reasons to buy Twitter right now

Published Mon, Aug 31 201510:16 AM EDTUpdated Mon, Aug 31 201510:21 AM EDT

Robert Peck of SunTrust Robinson Humphrey upgraded Twitter to "buy" Monday morning in a note sent to clients. Peck holds a lot of sway on Wall Street in regard to the social media company after he was one of the first analysts to say former CEO Dick Costolo's days were numbered. More importantly, he saved clients more than half their money in the stock after downgrading Twitter in April before the shares tanked this year. Here's why he's changing his tune on Twitter now ... Peck gave four key reasons why the company's stock will rise. 1) User growth from new initiatives: "Twitter has recently started or is about to roll out many new initiatives/partnerships which we think could raise both users and engagement for 2016. These initiatives should be incremental and include: Google desktop and mobile search results; Project Lightning; more business development deals similar to Flipboard; impact from 4Q marketing campaign; 500 million logged-out users; and mining the churned 1 billion user base." Peck estimates that the initiatives above could raise the Twitter monthly average users metric by 22 percent. 2) New monetization catalysts: "The company has also started or is about to start new monetization efforts that we think can lift revenue, these include: the Doubleclick partnership (starts 4Q); eCommerce (Buy button) ads; video ads; better targeting from the TellApart acquisition; the launch of the Twitter Audience Platform; MoPub growth; and search and carousel ad units." These new efforts can raise 2017 revenue by 15 percent Peck wrote. Read More 4 hedge fund managers offer advice on volatile market 3) Growth is still strong: Peck sees revenue increasing 45 percent to $3.3 billion in 2016. It will then more than double to $7 billion by the end of 2019. 4) Valuation is a good risk/reward: "We believe TWTR has a strategic floor value with cost synergies that could enable a buyout of 10 times EBITDA at current market cap." Read More Favorite picks from managers of top-ranked fund He reiterates his 2016 year-end price target of $38, which would be a 42 percent return from Friday's close. Twitter's stock rose by almost 4 percent in the first 15 minutes of trading Monday on Peck's call. — Michael Bloom contributed to this story.

NYSE trader on the floor of the NYSE ahead of the Twitter IPO launch.

Adam Jeffery | CNBC

Robert Peck of SunTrust Robinson Humphrey upgraded Twitter to "buy" Monday morning in a note sent to clients.

Peck holds a lot of sway on Wall Street in regard to the social media company after he was one of the first analysts to say former CEO Dick Costolo's days were numbered. More importantly, he saved clients more than half their money in the stock after downgrading Twitter in April before the shares tanked this year.

Here's why he's changing his tune on Twitter now ...