Twitter gets first “buy” rating

Twitter has been issued with its first “buy” rating before the shares have even hit the market with an analyst already predicting it will almost double in value during its first year of trading.

SunTrust Robinson Humphrey analyst Robert Peck, the first to rate the stock, reckons it could float at between $28 [£17.40] and $30 [£18.64] when it debuts and has the potential to reach $50 [£31.07] per share within a year’s time.

"It is important for investors to look at Twitter beyond just a 140 character text," Peck wrote in a 76-page note, according to Reuters.

Peck added that one of the biggest opportunities open to Twitter is the TV advertising market and the deal with Amplify influenced Peck’s optimism in this department.

The report also mentioned that taking advantage of search capabilities with a product similar to Google AdWords would be another way to generate money and push the share price upwards. Additionally Peck added that keyword targeting, introduced in April, is another way that it can vastly improve its revenue.

Revenue is something Twitter has had no trouble with over the past few years with the number tripling in 2012 to $326.9 million [£203.1 million] and already topping $253.6 million [£156.8 million] in the opening six months of 2012. It does continue, however, to report big losses with minus $69.3 million [£42.9 million] already on the balance sheet this year.

Twitter is yet to reveal how many shares it will end up listing and Peck’s projections are based on 50 million shares raising up to $1.5 billion [£930 million] and he came to his target based on 16 times enterprise value divided by revenue.

The micro-blogging service first announced it would be floating on the stock market in September by using a Tweet to tell the world it would be launching an initial public offering [IPO]. The company is aiming to raise some $1 billion [£622.5 million] through the IPO filing and the early signs, when it comes to analysts, look good.