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Twitter Gets an Upgrade, Buy Rating, and a $50 Price Target Despite Not Having Traded a Share

“It has been only four days since Twitter first took the wraps off its initial public offering prospectus. But that hasn’t stopped Robert Peck from setting a high $50-a-share price target on the still-private social network.

Mr. Peck, of SunTrust Robinson Humphrey, was the first research analyst to set a public target on Twitter’s not-yet-public stock. But by the time the regulatory filing came out, he had already conducted what he described as several months’ worth of work: talking to industry contacts, marketers and others.

Still, going first wasn’t the aim, he said in an interview.

“It wasn’t the main reason we did it, but it was a nice sort of benefit,” Mr. Peck told DealBook.

Instead, he wanted to use what even he would concede was limited information to decide whether Twitter was a worthwhile investment. What he concluded was unambiguous: His note set a $50 price target for Twitter, more than double the $20.62 at which the company itself valued its stock in August. That would value the company at around $31 billion on a diluted basis, up from nearly $13 billion now.

For Mr. Peck, the decision was based on the sense that Twitter had room to grow. Despite recording a net loss for the 12 months through the end of June, the company has been spending significantly on new tools like Vine, a short-video platform, and MoPub, a big advertising exchange.

“It reminds me of Facebook when they had just rolled out a bunch of new products that hadn’t shown up in the financials yet,” he said in the interview. “I like to see those investments in the platform.”

In his note, Mr. Peck argues that Twitter is a unique platform that isn’t quite like Facebook. Instead, it lets users broadcast their interests, 140 characters at a time, while also conversing with others. And it supplements other media like TV, as users comment on TV shows like “Breaking Bad” in real time.

The research note concedes that Twitter’s future is hard to determine…..”

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