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Twitter building a better birdhouse, says Wedbush, but repeats 'neutral'

Earlier, the social media giant turned its first quarterly profit and returned to revenue growth
Twitter building a better birdhouse, says Wedbush, but repeats 'neutral'
Twitter shares flew higher on Thursday

Twitter (NASDAQ:TWTR) is building a 'better birdhouse', reckons broker Wedbush, which has raised the price target to US$26 from US$17.50 but repeated a 'neutral' stance.

Shares in the tech firm surged almost 12% today to US$30.09.

"Despite our NEUTRAL rating and relatively modest price target, we see great potential for Twitter to reinvigorate sustained user and ad revenue growth," said analyst Michael Pachter.

"Once we see Twitter making progress on this front, we are prepared to revisit our investment thesis and price target."

Turned first quarterly profit..

Earlier, the social media social media giant turned its first quarterly profit and returned to revenue growth.

It reported net income of US$91mln for the fourth quarter, compared to a loss of US$167mln the same period a year earlier.

Total revenue rose 2% to US$732mln from US$717mln in 2016 as advertising revenue increased 7%.

Since going public in November 2013, Twitter had posted losses every quarter until now. 

At its last quarterly earnings in October, the company had said it could be profitable if it reached the high end of its estimates of US$220mln to US$240mln in adjusted EBITDA in the final three months.

The group reached an adjusted EBITDA of US$308mln in the final quarter, well ahead of its own forecasts and analysts’ estimates of US$241mln.

Unintuitive..

But Wedbush maintained its cautious outlook.

"Despite improvements, the service remains unintuitive and overcomplicated in our view," said the broker.

"While we view Twitter’s ability to deliver real-time news about virtually any topic as differentiated and valuable, we believe that sustained execution and more signs of a positive revenue growth inflection are required to become more constructive."

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