Despite Twitter's tumbling stock, which recently fell below its IPO price, good things are in store for Twitter, says one analyst.
In a note out on Monday, SunTrust analyst Robert Peck upped the stock to a buy and pointed to a series of "positive catalysts" coming soon.
Among the things that could excite investors again and push the stock higher: A new CEO and a variety of product launches and partnerships meant to drive user growth and revenue.
Peck thinks the company will name a new chief executive sometime around Labor Day and is predicting a triumvirate structure that includes co-founder Jack Dorsey (who is also CEO of Square and would be "inspirational" to employees), co-founder Ev Williams (who is also CEO of Medium) and the "affable" Adam Bain.
Dorsey is currently serving as interim CEO as the company continues to search for someone to take the top job permanently, following Dick Costolo's announcement that he was stepping down in June.
Twitter is also working on a number of new products to attract new users and boost engagement. The micro-blogging site has faced intense criticism from investors for its struggle to attract mainstream users (in a recent earnings call, the company noted having 95% brand awareness but only 30% penetration).
For instance, "Project Lightening" is set to launch in October and will hopefully make Twitter more user-friendly by curating interesting content and making it easier to find. A partnership with
Still, Peck sees only "modest growth" in Twitter's number of monthly average users and thinks what will really push the company's top and bottom lines higher is improved monetization based on the existing user base, including the 500 million who aren't logged in but may start to see Twitter show up across the web.
Twitter is doubling down on advertising and later this year will partner with Google's DoubleClick and introduce a "buy button" so e-commerce companies can sell to consumers right on the platform. It's also rolling out video ads and improving ad targeting.
Peck says his cautious optimism about where Twitter is headed is predicated on the speed with which the company names new management and its ability to execute on growth initiatives. He also says investors need to be patient and that proof of a turnaround will take some time.
If Twitter makes some missteps, though, Peck thinks it will become a strategic buyout target and is most attractive to Facebook and Google. In this case, the risk could be somewhat mitigated for investors, since languishing shares could be bolstered by Twitter's attractiveness as an acquisition.
Twitter's stock is down 22% this year and earlier this month closed below its $26 IPO price. It jumped 3.5% to $27.79 on Monday following the upgrade.
