After spending six quarters on the sidelines, one Wall Street analyst sees big upside ahead in Twitter for investors who can stick around for a "long-term turnaround".
Argus Research upgraded Twitter to a "buy" because of increased user engagement and the belief that Twitter will return to annual revenue growth in 2018.
"The faster relative growth in data & enterprise solutions revenue should benefit margins," analyst Jim Kelleher wrote in a note published Friday. "Twitter has demonstrated that it can successfully leverage higher revenue to boost the bottom line."
Kelleher's $25, 12-month price target, is forecasting a 25 percent rise in Twitter stock from Friday's close. The current average analyst price target on the Street is $18.20 – or nearly 8 percent downside – according to FactSet.
Twitter reported third-quarter earnings last week that topped Wall Street's estimates. The social media company also gave guidance that it could likely be profitable for the first time ever, according to generally accepted accounting principles (GAAP).
But not all Twitter investors are buying it. Ritholtz Wealth Management's Josh Brown, doesn't believe that the Q3 growth is indicative of a larger trend.
"I think you need another quarter to say that this is a trend," Brown said on Friday's Halftime Report. "We've actually seen this before every year since Twitter has become public. They will have this better-than-expected quarter and everybody will get bulled up and then it falls apart when it doesn't follow through."
Twitter saw its seventh straight quarter of year-over-year daily active users (DAU) growth - a key metric for social media companies - in the quarter ending September 30th. Monthly active users hit 330 million, a 4 million increase from the prior quarter.
Despite Twitter rising nearly 15 percent since reporting earnings, Brown hasn't taken profits on his position just yet. He believes that the company's 330 million user base will at some point be "more valuable than what people think it is right now."
Like Brown, Pete Najarian wants to see more evidence of a turnaround before opening a position. but he does believe the company is on the right track.
"They are doing things right. They are trying to be creative, they are trying to be innovative and have actually expanded and that's shown a lot of reasons why people are getting more interested in Twitter," he said.
Twitter shares are up 23 percent in the past three months; the S&P 500 is up 4.7 percent as of Friday's close.
Trader Disclosure: Josh Brown is long Twitter.