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Why some have high hopes for Twitter's earnings

Twitter reports its quarterly earnings Tuesday afternoon, and the company may be in better shape than many social media investors might think, some analysts said.

"People talk about Twitter as kind of a no-growth company," said Scott Kessler, internet analyst at S&P Global Market Intelligence. But Kessler expects Twitter to report earnings of 10 cents per share in the first quarter, a figure that's in line with consensus estimates. That compares with earnings of 7 cents per share in the quarter a year earlier, Kessler said in an interview with CNBC.

Still, Kessler classifies Twitter shares as high risk.

"Our risk assessment reflects the company's nascent business model, somewhat unproven monetization efforts and lack of profits, offset somewhat by a substantial global brand and platform and strength in mobile," Kessler wrote in a recent research note. Despite that, Kessler has a "buy" rating on the stock and a $21 price target.

Canaccord Genuity analyst Michael Graham urges caution. "Expect more audience challenges in Q1," Graham wrote in a research note released Monday. In the fourth quarter of 2015, Twitter reported that its number of monthly active users fell to 305 million from 307 million in the previous quarter.

"We believe revenue should be fine, but for the stock to regain momentum and drive higher ad penetration, user growth must show evidence of turning around," Graham wrote.

"While it appears Q1 may show limited progress on these fronts, we believe the rest of the year should hold more promise," Graham wrote.

Graham rates the stock a "buy" with a $23 price target, saying he believes Twitter will stay relevant among social media users, its number of monthly active users will grow, and it could be an attractive acquisition target. (The stock was trading around $17 midday Monday.)

Other analyst aren't as bullish. Sluggish user growth will overshadow positive news from the first quarter, according to Wedbush Securities analyst Michael Pachter.

"We believe that once Twitter adopts a strategy that will drive user growth and greater engagement, its advertiser base will grow dramatically," Pachter wrote in a research note. "But Twitter management appears not to recognize this," said Pachter, who gives the stock a "neutral" rating and a $20 price target.