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Citi upgrades Twitter, says sales could grow in fourth quarter

  • "This bird might not fly south for the winter," Citi analyst Mark May says in a Sunday note upgrading Twitter shares to neutral from sell.
  • May points out the social media stock underperforms its peers, but has recovered significantly from this year's lows and may be set for revenue growth in the fourth quarter.
  • Twitter shares are trading lower Monday after weekend news that one of its largest shareholders, Saudi Prince Alwaleed Bin Talal, was one of 11 princes detained in a supposed anti-corruption sweep in Saudi Arabia.
Twitter
Chris Ratcliffe | Bloomberg | Getty Images

Citi upgraded Twitter shares to neutral from sell based on the view the beaten-down social media stock may finally be set for modest growth.

"This bird might not fly south for the winter," analyst Mark May wrote in a Sunday report. He noted that Twitter shares are up 22 percent this year, a recovery of 41 percent for this year's lows but still far below the 45 percent gain of Citi's Internet Index.

May cited several reasons for his improved view on Twitter, such as potential for sales growth starting in the fourth quarter due to better advertising revenue, stability in user metrics and ad product improvements, and recent video partner deals that could help user engagement and monetization. May also factored in the potential for an acquisition.

Twitter shares fell 1 percent in Monday morning trading after weekend news that one of its largest shareholders, Saudi Prince Alwaleed Bin Talal, was one of 11 princes detained in a supposed anti-corruption sweep in Saudi Arabia.