UPDATE: SunTrust Upgrades Twitter, Inc. (TWTR) to Buy

SunTrust Robinson Humphrey upgraded Twitter, Inc. (NYSE: TWTR) from Neutral to Buy with a price target of $45.00. Analyst Robert S. Peck thinks monetization can drive stock returns as Twitter narrows the gap to Facebook (Nasdaq: FB).

"We believe Twitter is one of the few Platforms of the Internet (Google, Amazon, Facebook, LinkedIn) that has a long runway in its core business (owning the "Interest Graph"). Platforms of this scale are unique assets that provide interesting optionality over time," said Peck.

"With the stock’s recent >50% correction from December highs, multiples have contracted significantly and Twitter now trades at 9x 2015 revenues and 41x 2015 EBITDA. While this may still seem expensive at first glance, relative to its growth rates of 67%, and 130% respectively, the stock trades at a discount to already reduced growth adjusted industry multiples," he continued.

"While we believe the recent pullback was partially justified by User growth concerns and the share lock up expiration, we think several positives have been overshadowed: 1) Passing the beginning of the share lock up expiration and initial selling; 2) Rapid growth in monetization (up 76%), 3) Potential to increase its ad load vs. Facebook, which we estimate at <50% of Facebook’s, 4) Upside potential from nascent businesses like video and MoPub, 5) Optionality of new businesses like ecommerce (i.e., Amazon) and real time search, and 5) Rapidly expanding EBITDA margins. Lastly, increased liquidity now allows LT fund managers the ability to accumulate a portfolio position."

For an analyst ratings summary and ratings history on Twitter, Inc. click here. For more ratings news on Twitter, Inc. click here.

Shares of Twitter, Inc. closed at $32.05 yesterday.

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