Social media company Twitter (TWTR) rose 8.4% to close at $28.66 on December 26. Twitter stock has generated returns of 19.4% since the start of 2018. It has risen 0.7% since October and has slipped 8.9% this month.
The stock has generated returns of 27% in the last three years. The stock has lost over 50% of its market value since trading at $65.17 in December 2013.
Out of the 36 analysts covering Twitter, four recommend a “buy,” 21 recommend a “hold,” and 11 recommend a “sell.” The average 12-month stock price target for Twitter is $34.95, indicating an upside potential of 22% from current levels.
Twitter’s sales are expected to rise by 22.9% to $3 billion in 2018 and 14% to $3.42 billion in 2019. Sales could further rise by 12.6% to $3.85 billion in 2020. The company’s earnings per share are expected to rise by 82% in 2018 and 11.2% in 2019.
Twitter’s EPS are expected to rise at a CAGR (compounded annual growth rate) of 43.3% over the next five years compared to the annual gain of 55% in the last five years.
Given its revenue and earnings growth, Twitter’s forward 2018 price to earnings ratio of 20.4x seems to indicate that the stock is trading at attractive valuations.