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Twitter shares soar 11% after Morgan Stanley upgrades stock on 'improving user growth'

  • Morgan Stanley raises its rating on Twitter shares to equal weight from underweight, predicting better ad sales growth this year.
  • Analyst Brian Nowak cites recent conversations with advertisers for his increasingly positive stance.
Jack Dorsey, CEO, Twitter
Getty Images
Jack Dorsey, CEO, Twitter

A top Wall Street firm is getting more optimistic on Twitter's prospects.

Morgan Stanley raised its rating on Twitter shares to equal weight from underweight, predicting better ad sales growth this year.

"Constructive advertiser conversations, improving user growth, and positive revisions make [Twitter shares] a more compelling risk/reward," analyst Brian Nowak wrote in a note to clients Tuesday. "Recent advertiser conversations continue to be incrementally positive about Twitter's ad business."

Twitter's stock closed up 11 percent Tuesday.

Nowak increased his price target for Twitter shares to $29 from $28, representing 1.5 percent upside to Monday's close.

He said Twitter improved its ad tools for companies to better target users. He also noted that Twitter has reduced ad prices, spurring more demand.

"We believe Twitter's video ad product continues to perform well as advertisers continue to look for higher quality online video impressions," he wrote.

As a result, the analyst raised his 2018 Twitter sales estimate to $2.75 billion from $2.69 billion.